Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND SCIENCE

Schools (Opting Out)

Mr. Thurnham: To ask the Secretary of State for Education and Science how many schools have voted to opt out to date; and if he will make a statement

Mr. Harry Greenway: To ask the Secretary of State for Education and Science if he will make a statement on his proposed funding of opted-out schools

The Secretary of State for Education and Science (Mr. Kenneth Baker): At least 63 schools have begun the legal procedures for seeking grant-maintained status. So far parents have voted at 51 schools. In 38 they have authorised a formal application, and I have already approved four such applications. My proposals for funding grant-maintained schools were set out in a consultation paper on 10 March.

Mr. Thurnham: Does my right hon. Friend welcome the confidence shown by the parents of pupils at St. James's Church of England school which has allowed the school to take up a full entry quota for next year? Will he assure the governors of the school that they will receive all the support that they need in view of the mean-mindedness of

Bolton council which has threatened to withdraw all but the legal minimum of support services, even though the people of Bolton greeted my right hon. Friend's decision to provide grant-aided status with jubilation?

Mr. Baker: I deplore the absurd and rather threatening statement made some time ago by Bolton's chief education officer that teachers in grant-maintained schools do not have the right experience to serve in LEA schools. Thai is transparent nonsense. With regard to funding, local authorities will retail some legal responsibilities for certain services to pupils in grant-maintained schools, but when governors become responsible for running schools, they will have the money to provide the basic education service and to buy specialist support either from the local education authority or, if the authority is not willing, from other suppliers.

Mr. Greenway: Bearing in mind the excellent opt principle and its fairness, will my right hon. Friend assure the House that he will under no circumstances allow grant-maintained schools to be in any way disadvantaged in comparison with local authority schools? Will he take note of what the hon. Member for Birkenhead (Mr. Field) said—which contrasts with what his party has said—that Church schools and others should opt out of the local education system?

Mr. Baker: I assure my hon. Friend that the rules about parity of funding are clearly set out in the memorandum that I have already issued. Like my hon. Friend, I was very interested to see the report produced by the hon. Member for Birkenhead (Mr. Field). In it the hon. Gentleman praised the status of grant-maintained schools and advocated that that option should be taken up by Church schools. That is clearly a very significant contribution to the debate from a distinguished member of the Labour party. I only hope that the hon. Member for Leeds, Central (Mr. Fatchett) will listen to him.

Mr. Frank Field: Clearly the Secretary of State for Education and Science did not attend a grant-maintained school because if he had, he might have read the pamphlet more ably. In that pamphlet I advocated that opting out


schools should opt in to a federated Church status. If that happens, does the Secretary of State agree that the Education Reform Act 1988 would be radically changed in a way which might be more on keeping with his views, but less in keeping with those of the Prime Minister?

Mr. Baker: No. I think that in his pamphlet the hon. Gentleman urged that Church schools of all denominations should take advantage collectively or individually of grant-maintained status. I am glad that he had the courage to say that. I was a little surprised by the reaction of the Member for Leeds, Central when the pamphlet was published. He said:
Frank is out of line with party and Church thinking on this."——
but he added, and this must be very reassuring for the hon. Member for Birkenhead——
We are not going to kick him for having other views.

Mr. George Howarth: Does the Secretary of State agree that 97·4 per cent. of parents at Ruffwood school in my constituency, who voted against opting out, pretty well tumbled what a fatuous and stupid way that would have been to run their school?

Mr. Baker: The whole purpose of a ballot is that parents have a choice; some say no and some say yes, and more are saying yes than no. I am sure the hon. Gentleman will find it reassuring that more schools in Labour authorities—[Interruption.] I have the figures. Indeed, of the 63 schools which have so far embarked on the statutory procedures, 24 are in Labour-controlled local education authority areas, 22 in Conservative, 16 in hung areas and one in an SLD-controlled area. That disposes of the rumour that it is only in the Tory areas that schools wish to opt out.

Mr. Pawsey: Does my right hon. Friend agree that grant-maintained schools will have an impact out of all proportion to their numbers, because they will do a great deal to improve the quality and standard of state education and will be used as benchmarks against which other schools will be judged?

Mr. Baker: I am quite sure my hon. Friend is right. This is one of the reasons why we introduced this new type of school, and I am sure that they will provide a standard of excellence and will be beacons. This is, after all, the very thinking behind the pamphlet issued by the hon. Member for Birkenhead.

Mr. Straw: I, too, have a list, Mr. Speaker—on this occasion supplied by the GMS trust—which shows that of the 49 schools balloted, as of 4 April, only 20 are in Labour-controlled areas and many more in Conservative-controlled areas. [Interruption.] Sorry, 22—two more.
What is the Secretary of State's view of his senior chief inspector's report "Education Standards 1988–89" which shows that plans to reorganise secondary schools appear to have been slowed by uncertainty over the effect of recent legislation, especially that relating to grant-maintained schools? Does the Secretary of State agree with the chief inspector that opting out is paralysing the sensible planning of school provision, wasting money and is undermining education opportunities for a great many young people?

Mr. Baker: It will come as no surprise to the House that my figures are more up-to-date and correct than the hon.

Gentleman's. I do not believe that reorganisation plans are being paralysed. It is interesting that some of the schools which decided to vote no are themselves subject to major reorganisation, amounting virtually to closure, and that they have voted in favour of that rather than go for grant-maintained status, which indicates that the essence of this and what the Labour party does not like about it is that grant-maintained status is all about parental choice, and that is what we are seeing.

Schools (Financial Management)

Mr. Anthony Coombs: To ask the Secretary of State for Education and Science what representations he has received on the average cost method of allocating resources to schools under the local financial management provisions of the Education Reform Act.

The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): My right hon. Friend has received some correspondence from authorities and schools expressing concern about the requirement for schemes of local management to provide for average costs, including average salary costs, to be reflected in the formula for distributing resources between schools. Circular 7/88 allows LEAs to devise formulae which safeguard the position of small schools which might otherwise find it difficult to accommodate actual salary costs. I understand that the majority of authorities are satisfied that this flexibility provides a certain measure of protection.

Mr. Coombs: Will my right hon. Friend confirm that in the consultation processes in schools there is a tremendous and almost universal acceptance of the opportunities put forward by local financial management? Will she also agree, however, that there is some concern at the interaction between the provisions of the school pay and conditions document and the average cost per capita methods of funding different schools, which may in some cases lead to differences of £40,000 between similar schools? Will she therefore consider giving the opportunity of flexibility to certain LEAs in order to be able to vire funds between those schools to avoid those kinds of anomalies?

Mrs. Rumbold: It is true that during the consultative period a large number of authorities agreed that local management of schools will be beneficial. Also, it is misleading at the present time to look simply at one of the cost elements in isolation when considering some of the formulas. It is essential for all authorities to consider the combined effect of all the elements in the formula and not simply the salary costs. On the final question, I do not want to anticipate the statutory approval process but, of course, it may well be possible that there would be some flexibility in individual, exceptional cases, where there are particular difficulties.

Mr. Jacques Arnold: Has my hon. Friend noted that a number of Kent schools have been running under local financial management for some time, two of them in Gravesham? Has she further noted that that is immensely popular with the local schools since it allows them to obtain greater value for the money provided and the ability to make cash purchases which has resulted in the quick delivery of books, and at a discount?

Mrs. Rumbold: I am delighted to hear of those experiences in Gravesham in my hon. Friend's constituency. During a recent visit to another authority a head teacher told me, of his own volition, that he had been very much against the idea of local management schemes, but after three years of operating he was entirely in favour of it because he had found so much to his benefit that he had not expected.

Mr. Frank Field: The Minister says that local education authorities are happy that they should determine the formula. Are small schools happy with that?

Mrs. Rumbold: As the hon. Gentleman will know, there is special provision for small schools with fewer than 10 teachers to have their provisions determined by the local education authority within the formula weighted in their favour. Therefore, there is provision within the formula for small schools.

Mr. Stern: To ask the Secretary of State for Education and Science if he plans to issue further advice to education authorities on the criteria to be used in dividing existing education budgets among the schools under their control for the purposes of local financial management.

Mrs. Rumbold: Circular 7/88 sets out the framework for local education authority schemes of local management. My right hon. Friend has no plans to issue further guidance. Officials of the Department's LMS unit are in touch with individual local education authorities and are happy to advise on any particular points of concern which may arise during the preparation of a scheme.

Mr. Stern: I am grateful to my hon. Friend for that reply. Will she encourage local education authorities as much as possible to use all the flexibility that is available within the current guidelines and, where necessary, advise local authorities on an individual basis of the amount of flexibility that it is available to avoid unnecessary and unacceptable results in the funding of individual schools?

Mrs. Rumbold: Yes. I can reassure my hon. Friend that local authorities have the necessary flexibility to construct a formula for special circumstances—for example to weight resources in favour of individual schools in inner cities, those which serve disadvantaged areas, those which admit a higher than average proportion of pupils from ethnic minorities or those with special educational needs.

Mr. Spearing: Can the Minister confirm that local financial management includes responsibility for the repair and maintenance of buildings? If that is so, is that not rather arbitrary? Could it not put an unfair burden on some schools? What guarantee can the Minister give that her Department will provide local authorities with sufficient funds to ensure that schools are treated equitably in that matter?

Mrs. Rumbold: The local financial management schemes will include some money within the formula for general repairs and maintenance. Where such work can be shown to be capital expenditure, it will fall outside delegation within a local financial management scheme and it will be the local authority's responsibility to allocate resources.

Universities (Salaries)

Mr. John Marshall: To ask the Secretary of State for Education and Science what representations he has received on academic salaries in universities.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson): My right hon. Friend has received representations from the Committee of Vice-Chancellors and Principals and the Association of University Teachers seeking additional funds for pay increases for university staff. He has also had many letters about salary levels in universities and in criticism of the boycott of examination work by lecturers.

Mr. Marshall: Does my hon. Friend agree that those academics who are refusing, or threatening to refuse, to mark examination papers are behaving in an unacademic, immoral way which is tantamount to blackmail? Does he also agree that some of them may well be in breach of their contractual obligations to their university, and will he advise pusillanimous principals to take the necessary disciplinary measures against them?

Mr. Jackson: My hon. Friend is right. The money offered represents a fair increase in academic pay. The Government have put in extra money and there is no more to come. I hope that all parts of the House join us in condemning any prospect of the rejection of that offer, because that would put students at risk and damage the professional reputation of British university academics.

Mr. Simon Hughes: Does the Minister recognise that university teachers have a justifiable complaint, given that they received a 0·5 per cent. increase last year and have just been offered 6 per cent. for this year? In view of the great Budget surplus of which the Government are so proud, and given that we cannot allow students to suffer, with the prospect of no examinations in the summer, will the Secretary of State and his Ministers take the initiative by pouring oil on troubled waters and offer to talk about more money in return for the lecturers offering to suspend their action and allow this summer's examinations to take place?

Mr. Jackson: The House should appreciate the context and the sequence of events. On 1 December 1986 there was an increase of 16·6 per cent., and on 1 March 1988, an increase of 7·4 per cent. That meant a 24 per cent. increase in dons' pay between 1985 and 1988, at a time when the retail price index rose by only 13 per cent. There is now an offer from 1 March 1989 of the equivalent of 6·5 per cent., with a further 1 per cent. due for discretionary payments from October. That is a very reasonable and generous offer that has involved additional Government resources, and it should be accepted.

Mr. Brandon-Bravo: My hon. Friend will acknowledge that Nottingham university is not exactly a hotbed of militant unrest. Nevertheless, whatever may be the rights and wrongs of this particular case, and regardless of whose figures are right, does my hon. Friend acknowledge that, particularly in science and managerial disciplines, we cannot offer the salaries that will ensure the standards that we believe are necessary in higher education in the long term?

Mr. Jackson: Some evidence was provided—it must be said, rather scanty evidence—of recruitment and retention


difficulties in some areas in the universities. That was one of the reasons that led the Government to advance proposals for extra money. The key to solving the problem lies in increased differentiation in university pay. That element has been included in the offer we have made.

Mr. Andrew Smith: Does the Minister acknowledge that his letter published in The Independent last Thursday and his advocacy of university teachers moonlighting to make up what he conceded to be a 25 per cent. cut in their relative pay is singularly ill-judged and insulting, and provides incendiary support for the cause of rejecting the ballot offer? Is moonlighting now the policy of the Government throughout public sector higher education, and is it the policy also of the Secretary of State?

Mr. Jackson: I was attempting to meet the argument that there has been a 25 per cent. cut in dons' pay relative to average earnings. I made the rather elementary point, which I hope the hon. Gentleman understands, that pay is not the same as earnings, and that there is reason to believe that the earnings of academics have increased in the same way as the earnings of other people. It is appropriate for the Government to encourage dons to write books and articles, undertake consultancies, and to assume directorships—all of which involve extra earnings.

Assessment Tests

Mr. Nicholas Bennett: To ask the Secretary of State for Education and Science if he will make a statement on the progress being made towards implementing assessment tests for school pupils at seven, 11 and 14 years of age.

Mrs. Rumbold: The first step towards implementing the Education Reform Act 1988 is to establish programmes of study——

Mr. Skinner: Mr. Speaker, have you read The Observer——

Mr. Speaker: Order. That matter has nothing to do with Education Questions.

Mrs. Rumbold: The first step towards implementing the Education Reform Act 1988 is to establish programmes of study for each of the core and foundation subjects. That process is well under way and programmes of study will be introduced for mathematics and science for seven and 11-year-olds this autumn. Children will be assessed in these subjects on a trial basis in 1991, and from 1992 on a reported basis. Assessment arrangements in other subjects and for those and other key ages will be phased in over succeeding years.

Mr. Bennett: In view of the fact that teachers have always tested children, does my hon. Friend share my astonishment, and that of parents, that some teachers and some teachers' unions oppose those tests? Does she agree that assessment tests will provide a national standard benchmark by which schools and teachers can be judged, which will also help parents to judge the progress of their children and how they can best be helped?

Mrs. Rumbold: My hon. Friend is absolutely right. The importance of introducing assessment together with the national curriculum is that it will enable teachers, parents and children to monitor the children's programmes of study within the national curriculum. It is absolutely

essential that assessment is introduced. I am surprised to learn that some teachers do not agree with this particular policy since I understand that for many years it has been the practice of the majority of teachers to assess the children in their classes on a monthly basis.

Mr. Grocott: Given the Minister's enthusiasm for this endless formalised testing, despite all evidence to the contrary, will she tell us at what point she will have an assessment of the effectiveness of these tests? Will she give a commitment that if they are discovered to be valueless she will scrap the system?

Mrs. Rumbold: I think it very unlikely that assessment will prove valueless since it is a part of the process of teaching which has been going on in schools throughout the country, as we have been assured endlessly by teachers. So the assessment process that we are introducing, following the introduction of the programmes of study with the national curriculum, will be useful not only to the teachers but to the parents. It seems very unlikely that there will be any occasion for parents to wish that assessment be discontinued.

Mr. Favell: At the moment it is virtually impossible to dismiss an incompetent teacher. What is to be done about teachers whose pupils consistently fail their assessment tests?

Mrs. Rumbold: It is hoped very much that we shall ask for teachers themselves to go through a form of assessment. The introduction of teacher appraisal will help those who have difficulty to reassess themselves and to undertake in-service training to improve their performance with pupils. It is crucial that our children are given the best possible teaching and that the teachers themselves produce the results, through assessment and testing, to which pupils and parents are entitled.

Ms. Armstong: Will the Minister take the opportunity to tell the House if age-related testing is to be used as part of the process of ensuring that all children reach their full potential or if, as many now fear, it is to be used as a totally inadequate way of pitting school against school and child against child? Will she further make it clear that crude test scores will not be published for seven-year-old children because such scores would be both misleading and potentially damaging to children's progress?

Mrs. Rumbold: I find it very sad that the hon. Lady should repeat that kind of misinformation to the general public. The whole purpose of testing and assessment of children is to ensure that all children, throughout their school years, can achieve their potential. This is what the whole of the national curriculum is designed to do. We are putting the programmes of study first and the assessment of those programmes afterwards to discover what children have in the way of understanding and knowledge.

Primary Schools (Staffordshire)

Mr. Knox: To ask the Secretary of State for Education and Science how much was spent per pupil for primary schools in Staffordshire in the most recent year for which figures are available; and what was the comparable figure in 1978–79, at constant prices.

The Parliamentary Under-Secretary of State for Education and Science (Mr. John Butcher): In cash terms,


Staffordshire spent £370 per primary pupil in 1978–79 and £980 per primary pupil in 1987–88. At 1987–88 prices those figures are £755 and £980 respectively.

Mr. Knox: Does my hon. Friend agree that these figures show an impressive increase in expenditure per pupil in primary schools in Staffordshire since the present Government came to power? Will he further agree that they provide no evidence at all of alleged cuts in education and staffing by the Government?

Mr. Butcher: I fail to understand how the word "cut" can be used accurately in relation to education budgets. Nationally there has been a 35 per cent. increase in real terms in expenditure per pupil and a not too dissimilar increase in Staffordshire. My hon. Friend is absolutely right: those of us who wish to see improvements in standards of education have put our money where our mouths are and have adequately funded that improvement.

Primary School Teachers

Mr. Matthew Taylor: To ask the Secretary of State for Education and Science what proportion of primary school teachers' working time has been assigned as non-contact time in each of the last five years.

Mr. Butcher: The 1987 primary school staffing survey showed that there were 22·5 hours of taught lessons in the average pupil's week in maintained primary schools in England. Within that total, teachers had an average of two hours' non-contact time.

Mr. Taylor: The Minister will be aware that the same unpublished staffing survey, which is lodged in the House of Commons Library, makes it clear that fewer than half of all primary school teachers have any non-contact time. In my own area, virtually no teachers have non-contact time. A typical school in Cornwall has been described as three teachers and three classes. What will the Minister do to ensure that resources are provided to give teachers the necessary preparation time, particularly in view of the demands placed on them in the drawing up of preparations for the national curriculum?

Mr. Butcher: Non-contact time within the pupil week is not the whole story. Considerably more non-teaching time is available within the 1,265 hours a year that teachers are required to work, and that can be used to prepare for the national curriculum. Of the 195 days a year on which a teacher is required to work, five may be used for in-service training, and schools may close for two days this year specifically to prepare for the introduction of the curriculum.
I know that many representations are being made on the need for further in-service training, but any dispassionate examination of the figures will show that the teaching profession in this country is very well provided for in training.

Mr. Harry Greenway: Will my hon. Friend examine marking periods in the school week, as distinct from non-contact time as set out in the Education Reform Act? Will he do all that he can to ensure that periods are set aside for marking?

Mr. Butcher: As I said earlier, considerable discretionary allocation of time is available to headmasters. Some

800 of the 1,265 hours are direct teaching time. I should have thought that the activity to which my hon. Friend refers could be catered for within a well-managed school, provided that headteachers were prepared to use their management discretion appropriately. That, indeed, was one of the conclusions reached in the recent Her Majesty's inspectorate report.

Mr. Flannery: The shortage of teachers is now so serious that the Select Committee on Education, Science and Arts is examining it very carefully. Has not that shortage, which the Government have created by attacking teachers relentlessly—an attack led from the top on the Front Bench—resulted in the virtual disappearance of non-class-contact time in primary schools? Not only that, but teachers in the primary sector are now staying behind regularly, for an hour or two every day, because of the pressures imposed upon them. When will the Government realise that to bring back teachers who have left the profession they must increase wages and give teachers back their negotiating rights?

Mr. Butcher: The position described by the hon. Gentleman is simply not reflected in the facts. Primary class contact rates have fallen from 91 per cent. in 1984 to 89 per cent. in 1988. That means that, on average, teachers are spending less time in front of classes.
The question of teacher shortages is complex. We understand that there are geographical and, indeed, subject difficulties, and I hope that some of the action plans introduced by my right hon. Friend the Secretary of State will be supported by the hon. Gentleman, as they are proving effective.

Pupil-Teacher Ratio

Mr. Patnick: To ask the Secretary of State for Education and Science what has been the change in the ratio of pupil-teacher numbers over the last five years for which figures are available.

Mr. Butcher: The overall pupil-teacher ratio in maintained nursery, primary and secondary schools has improved from 17·9 in January 1984 to 17 in January 1988. There are now more teachers relative to pupils than ever before.

Mr. Patnick: I thank my hon. Friend for his answer. Would he care to comment on the initial teacher training recruitment, which is vital if the trend established under the present Government is to continue?

Mr. Butcher: Yes, I should like to report to the House on initial teacher training, but before I do so let me give the House some new information. We have received a massive response to our recent advertising campaign, and more than 8,000 people have expressed an interest in teaching as a career. Surely that gives the lie to the assertion that those who wish to enter the teaching profession are being deterred by alleged demoralisation in the profession.
Recruitment to ITT reached a record in 1988; it was up by 5 per cent. on recruitment in 1987. Primary recruitment was up by 12 per cent. Secondary recruitment was down, but by only 250 students; the underlying trend is still upward.

Mr. Andrew F. Bennett: Of the 8,000 people to whom the Minister referred, how many were interested in


teaching science, maths, combined technology and similar subjects? Does he have evidence to show that the Government's recruitment drive is solving the shortage of teachers in those subjects?

Mr. Butcher: I do not have a breakdown of subjects of interest referenced by those 8,000 responses. If the hon. Gentleman looks at the figures from the Universities Council for the Education of Teachers he will find that there was a higher placement of teachers of maths and science than was the case for teaching in the generality. The fact is that many people are looking for a job in the profession. There are geographical difficulties and differences in standards of living in different regions, and we are aware of them, but I wonder whether the hon. Gentleman would care to talk to his ex-colleagues in the teachers' unions about, for example, regional pay.

Teacher Recruitment

Mr. Wallace: To ask the Secretary of State for Education and Science if he has any plans to provide additional resources for teacher recruitment.

Mr. Kenneth Baker: My Department's action programme includes bursaries, in-service training, the teaching as a career unit and new publicity, which has amounted to over £51 million in the last three years. That programme will continue and will be extended.

Mr. Wallace: Is the Secretary of State willing to accept that there are still acute shortages in subjects such as maths and physics and that in the last two years his bursary scheme has reached target only once in one subject? Does that not represent a failure? Is it not a fact that far more resources are required if people are to be brought into teaching, not least in subjects such as maths and physics, in which there exist important and serious shortages?

Mr. Baker: Last year saw record figures for the intake of trainees into initial teacher training. The number of applications for the autumn of this year show an increase of 10 per cent. over the number last year. I accept, however, that there are difficulties in the subjects to which the hon. Gentleman referred—in maths, physics, technology and chemistry—and that is why I have extended the bursary scheme to chemistry trainee teachers.

Mr. Baldry: Does my right hon. Friend agree that the deciding factor in whether a sufficient number of people come forward is the way in which the profession portrays itself? To that end, does he agree that every teacher should take cognisance of the advice given by June Fisher, president of the National Union of Teachers, that teachers should stop whingeing and moaning and should take a pride in making a success of the Government's education reforms?

Mr. Baker: My hon. Friend is right. Far too many people at the teacher conferences last week were talking down their profession. We want to extend the opportunities for qualified people to become teachers. That is why we are putting forward our proposal for licensed teachers, a proposal which is being widely welcomed by many Labour local education authorities. It is absolutely absurd to believe that people who are

qualified—who have had two years in higher education and experience in business—should not come into the teaching profession.

Mr. Fatchett: When will the Secretary of State recognise that we are now faced with acute teacher shortages in our schools? When will he also recognise that morale is at an all-time low in the teaching profession? How does he think he will be able to attract more people into the profession when this year he has imposed a cut in real living standards on teachers? When will he stop kicking teachers around?

Mr. Baker: In the recently completed advertising campaign we received over 8,000 applications from people seeking to be teachers. The numbers going to initial teacher training later this year are up by nearly 10 per cent. compared with last year. As for attracting people into the profession, I hope that the hon. Gentleman will welcome our proposal for licensed teachers, because many Labour education authorities are welcoming them.

City Technology Colleges

Mr. Squire: To ask the Secretary of State for Education and Science how many parents have written to him objecting to the establishment of a city technology college.

Mr. Kenneth Baker: Our records show that only 15 letters of objection have been received in nearly two and a half years to city technology colleges. Parents see the CTC programme as a great opportunity for their children. There have been over 1,200 applications for 180 places available this year at Kingshurst, the first CTC. That is what parents think of CTCs.

Mr. Squire: Does my right hon. Friend agree that that excellent answer give the lie to the comments that we sometimes hear from Labour Members to the effect that parents and children do not want CTCs? Will my right hon. Friend particularly confirm that the interest is as high, if not higher, in areas where poorer standards of education and an absence of choice have been a legacy from the Labour party?

Mr. Baker: We are receiving applications from many areas to have CTCs—either new colleges or schools converted to CTCs. This is proving to be a very popular policy, because people recognise that these schools provide a special type of education. We want them to become beacons of excellence, copied by others. Of course, that is now happening in the Birmingham area.

Mr. Madden: If the Secretary of State is so confident that parents want CTCs, why is he so terrified to allow parents in Bradford a ballot to decide whether £8 million of their money should be spent on setting up a CTC, at a time when the vast majority of them see the expenditure of that amount of money as being wholly unnecessary, very divisive, and damaging to the existing schools in the city?

Mr. Baker: That is simply not true. It has been possible to establish a CTC in Bradford—a new one, to be built next year—only because the Conservatives now control Bradford city council. The hon. Gentleman will find that, once that school is established and has started to recruit,


it will be one of the most popular in Bradford, to which the children of many of his constituents will want to go. [Interruption.]

Mr. Speaker: Order. I ask the House to listen to Education Questions.

Mr. Holt: My right hon. Friend will know that the new Macmillan CTC in Teesside has been oversubscribed by teachers many times over, and that many of the parents of the 40 to 60 children who applied to join but have not been found places this year will want a new college in addition to the one that we already have.

Mr. Baker: Once again, I am quite sure that that school will be very popular. Many teachers want to teach in it, and many parents want to send their children to it. I am quite sure that after it has been established for a few years its popularity will grow even further.

Mr. Straw: The Secretary of State must be aware that the parents of children at the Sylvan school in Croydon, which is the subject of a proposal to turn it into a CTC, have voted overwhelmingly to keep it as a county school. Why is the Secretary of State refusing to accept the outcome of that parents' ballot?

Mr. Baker: I understand that the Croydon local education authority voted only last night to publish statutory notices to close the school. That triggers a formal process, and the application will come to me. Of course, I will take into account any objections to the proposal.

School Closures

Mr. Rooker: To ask the Secretary of State for Education and Science to what extent he takes into account parental wishes when considering a school closure.

Mr. Butcher: In considering statutory proposals for school reorganisations, my right hon. Friend takes full account of all representations made by parents, both for and against the proposals.

Mr. Rooker: If the majority of people who have children at Sylvan high school in Croydon are so determined that the school should not be closed, as they have constantly made clear to all four Members of Parliament for Croydon, including you, Mr. Speaker, will the Government accept the wishes of the parents?

Mr. Butcher: The section 12 proposal has now been issued, and we will look at it—as we look at all section 12 proposals—on its merits, separate from the consideration of the CTC.

Mr. Latham: When my hon. Friend comes to consider the section 12 notice to close Long Field high school in my constituency, which is full and, indeed, is extremely popular, will he confirm that he will consider at the same time the 96·4 per cent. parents' vote to go for grant-maintained status?

Mr. Butcher: Of course, we look at the merits of a particular school proposed for closure. Indeed, I take very seriously representations from parents who are concerned to maintain the quality of an existing, well-managed school with a good ethos. Matters of that sort will be taken into account.

City Technology Colleges

Mr. Simon Hughes: To ask the Secretary of State for Education and Science what measures are being taken to find sponsors for city technology colleges.

Mr. Kenneth Baker: We have worked hard to bring the CTC programme to the attention of industry and commerce, and there has been a magnificent response to its aims of raising standards, increasing choice, and giving the private sector a say in how schools are run. Thirty-four million pounds—and unprecedented sum—has already been pledged, and much more will follow.

Mr. Hughes: Given that there is some reported indifference among big business to sponsorship of CTCs, what does the Secretary of State consider will be the effect of Tory-controlled Bexley deciding not to go ahead with one, and of the parents in Tory-controlled Croydon voting by 480 to 14 not to go ahead with a CTC? If parents say not to CTC, will the money from the sponsor be made available to the school, via the local education authority?

Mr. Baker: I should be grateful if the hon. Gentleman would make his views on CTCs known, because in the past he has attacked them. However, I gather that, as a member of the governing body of Bacon's school, he has voted for the proposals for that school to become a CTC to go out to consultation. He really should get off the fence.

Council for Industry and Higher Education

Mr. Ian Taylor: To ask the Secretary of State for Education and Science when he last met the chairman of the Council for Industry and Higher Education; and what matters were discussed.

Mr. Jackson: My right hon. Friend meets the chairman of the Council for Industry and Higher Education periodically, both formally and informally.

Mr. Taylor: Will my hon. Friend note the welcome that we give to the council and its work and our acknowledgement of the importance of links between education and industry? Will he encourage the idea of regional councils and will he note in particular that the university of Surrey is doing splendid work with local industry and is pioneering further development?

Mr. Jackson: One of the most encouraging features of the higher education scene is the growth of contact between the world of academe in the universities and the polytechnics and industry. The Council for Industry and Higher Education is one of the most notable manifestations of that. We very much welcome it and all proposals for its further development.

Oral Answers to Questions — PRIME MINISTER

Engagements

Ms. Mowlam: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today.

Ms. Mowlam: As it is the Government's view that doctors who oppose the Health Service plans are simply feeling for their wallets, what motive does the Prime Minister use to explain the nurses' opposition?

The Prime Minister: I believe that the nurses who have taken part in the five-hospital experiment for the financial initiative will give evidence that it has worked extremely well and has given far more responsibility to both doctors and nurses. Many other reforms in the Health Service have been fought most bitterly by the medical profession. The initial introduction of the National Health Service in 1948 was fought most bitterly by the medical profession, but it was welcomed later.

Mr. Curry: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Curry: I congratulate my right hon. Friend on her successful visit to southern Africa, particularly her decision to visit Namibia to support the United Nations plan to bring that territory to independence. Will she therefore condemn the incursion from Angola by SWAPO guerrillas into that territory, which is putting at jeopardy the whole of the painfully acquired process?

The Prime Minister: Yes. The secretary general's report to the United Nations and the Security Council specifically confirms that there has been a large-scale incursion from Angola into Namibia by armed SWAPO personnel. It is a most serious challenge to the authority of the United Nations and the internationally agreed arrangements for Namibia's independence, and I certainly condemn it. There is no provision in the United Nations plan for SWAPO to have bases in Namibia. SWAPO committed itself to the Geneva accord under which it is required to stay north of the 16th parallel in Angola. It is the breach by SWAPO which has led to the most regrettable fighting and loss of life. I emphasise that the South African units involved are acting with the authority of the United Nations. It is now important that the authority of the United Nations—[Interruption.]

Mr. Speaker: Order. These are very important matters.

The Prime Minister: It is important that the authority of the United Nations should be upheld and the arrangements implemented in full.

Sir Russell Johnston: Is the Prime Minister aware that many of us believe that the lengthy reply that she has just given should have been in the form of a statement which the House could have examined at greater length? Is she completely confident that the description of events that she has given us, which is being disputed by several newspapers, is absolutely accurate?

The Prime Minister: The hon. Gentleman can read for himself the report of the secretary general to the United Nations Security Council, which specifically confirmed that there has been a large-scale incursion from Angola into Namibia; he can obtain for himself a copy of the agreements to which the several member states were signatories; he can also obtain for himself a copy of the Geneva protocols which were specifically agreed to by SWAPO. All those are public knowledge, and the hon. Gentleman can get them from the Library at any time.

Mr. David Porter: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Porter: As many East Anglian people are worried that Suffolk and Norfolk may miss out on the benefits of 1992 and the Channel tunnel, can my right hon. Friend reassure East Anglians on the coast that road and rail investment will not be left behind, and that the persistent long-term unemployment there will give way to the prosperity which is now being enjoyed by most other parts of the United Kingdom?

The Prime Minister: We recognise that East Anglia is a very important area of economic growth, and our substantial and continuing programme of road improvements includes 29 schemes, worth about £220 million, in East Anglia. We have also recently approved investment in electrification from Cambridge to King's Lynn and in new rolling stock to relieve overcrowding. I am pleased to see that East Anglia now has the lowest rate of unemployment of all the regions.

Mr. Kinnock: Does the Prime Minister recall that when she started raising interest rates last year, inflation was just over 4 per cent.? It is now just under 8 per cent. What has gone wrong?

The Prime Minister: The raising of interest rates will gradually work to choke inflation down. I am the first to say that what we regard as one of our less good performances was regarded by Labour as its best.

Mr. Kinnock: On present trends, what level of interest rate will have to be charged in order to reach the right hon. Lady's objective of zero inflation?

The Prime Minister: Those who wish for specific answers on interest rates can only be seeking to help the speculators.

Mr. Ian Taylor: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Taylor: I am sure that my right hon. Friend will join all Conservative Members in wishing NATO a happy 40th birthday. Will she note that we encourage her to hold further discussions with President Gorbachev during his visit about the need for further and deep cuts in conventional forces and chemical weapons on the Soviet side? Will she also note that a recent opinion poll has shown widespread support for steadfast British defence policies, and that the British Government do not need to go cap in hand to Moscow to find a defence policy?

The Prime Minister: I agree with my hon. Friend, and I think that most British people agree, that NATO has kept the peace successfully for 40 years. It is needed as much in the future as it was in the past. It is vital that we keep in step with America and Canada on NATO.
I agree that we must modernise our forces, including nuclear forces. NATO has already agreed that they must be modernised, on the basis that obsolete weapons do not deter. What is at issue is the precise timing of that


modernisation. I shall discuss that with Mr. Gorbavchev. The Russians have already modernised their short-range nuclear weapons.

Mr. Vaz: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer the hon. Gentleman to the reply that 1 gave some moments ago.

Mr. Vaz: The Prime Minister will recall encouraging millions of people throughout the country to buy their own council homes. Will she now put the Government's money where her mouth is or, rather, was, and provide financial assistance to constituents of mine and other hon. Members who have taken her at her word, purchased their council houses and found them to be seriously defective? Will she support people such as my constituents on the Morton estate, or will she abandon them as she has abandoned millions of people who have been deceived by the Government's policies?

The Prime Minister: Well over 1 million people have purchased their council homes at a very substantial discount and I hope that more will take advantage of that opportunity. It is an opportunity which the Labour party fought against and which was provided by this Government.

Mr. Oppenheim: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Oppenheim: Will my right hon. Friend take time today to congratulate the designers, craftsmen and managers of Rolls-Royce, who have just won yet another huge order for aero-engines in the teeth of fierce world competition, this time for 20 Cathay Pacific Airbuses? Does this not show that British high technology products can and do sell on world markets?

The Prime Minister: Yes, I warmly congratulate Rolls-Royce on this excellent £1 billion order for engines for the Airbus and, of course, the order will also help British Aerospace. It is very good news and shows that British industry at its best can compete with the best in the world.

Mr. Robert Hughes: Will the Prime Minister have a word today with the Secretary of State for Transport about the disgraceful decision to hold up yet again the report on the Chinook disaster, apparently at the behest of the Boeing company? Does she accept that we must have absolute faith in the integrity of official reports into accidents, for the safety of the thousands of people who use helicopters in the North sea? Will she ask the Secretary of State to make a statement to the effect that he will publish that report in full without one comma or jot changed, in order to assure us that we have that integrity?

The Prime Minister: My right hon. Friend the Secretary of State for Transport is following the procedures laid

down by Parliament in the Civil Aviation (Investigation of Accidents) Regulations 1983. Subject to any legal constraints, I expect the air accidents investigation branch report and the report of the review board to be published very shortly. The hon. Gentleman will know that publication of the reports before the contentions of the Boeing company are adequately considered would be against the regulations and could invite a conclusion that the publication might be regarded as prejudging the question of a rehearing. My right hon. Friend is following precisely the law as laid down by the House.

Mr. Riddick: To ask the Prime Minister if she will list her official engagements for Tuesday 4 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Riddick: Is my right hon. Friend aware that the KGB defector Major Levchenko, revealed that the spying activities of the KGB reached their peak during the years of detente in the 1970s? Can she confirm that KGB espionage activities—[HON. MEMBERS: "Reading."]

Mr. Speaker: Order. Give him a chance.

Mr. Riddick: Can my right hon. Friend confirm that KGB espionage activities are increasing now and have increased since President Gorbachev came to power and, indeed, since glasnost was introduced? [Interruption.]

Mr. Speaker: Order. It does not help the hon. Member.

Mr. Riddick: Is this not a clear demonstration that, despite Mr. Gorbachev's slick PR image, the West cannot afford to lower its guard?

The Prime Minister: As my hon. Friend is aware, we believe that defence matters do not depend on good intentions but on a sure and strong defence. We find no reduction the world over in the activities of the KGB.

Mr. Wareing: During the last football season there were 33 arrests associated with matches at Liverpool, 24 arrests at Everton and 38 at Manchester United. At Hampden Park, Glasgow, there were 152 arrests and at Ibrox Park, the home of Glasgow Rangers, there were 407 arrests. Yet it is the supporters of English clubs—[Interruption.]

Mr. Speaker: Order. Will the hon. Gentleman make his question brief?

Mr. Wareing: It is the supporters of English clubs who are to be penalised by the identity card system. [Interruption.] Will the Prime Minister tell us where the sense is in that?

The Prime Minister: I heard the statistics given by the hon. Gentleman, but the rest of his question was drowned. Last year in England and Wales as a whole there were about 6,000 arrests and it was, therefore, important for us to take action to bring in membership cards. We have done that.

House of Fraser

Mr. Speaker: Before calling upon the hon. Member for Dagenham (Mr. Gould) to ask a private notice question relating to the publication of the inspectors' report on the House of Fraser, I wish to make it clear that quotations from the text of the report would contravene our sub judice rules. [Interruption.] Order. An appeal on this matter is to be heard in the House of Lords on 10 April. I am aware that the court has varied an injunction so that our proceedings may be reported, but that does not relieve us of the obligation to respect our own rules, and the Chair will not allow the use of alleged texts of the report while questions on its publication remain sub judice.

Mr. Bryan Gould: (by private notice): To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the publication of the DTI inspectors' report into the affairs of the House of Fraser.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Anthony Newton): Inspectors were appointed to investigate the affairs of House of Fraser Holdings plc in April 1987. They reported to my right hon. and noble Friend on 23 July 1988. Their findings disclosed evidence of wrongdoing such that my right hon. and noble Friend felt it right to refer the report to the serious fraud office and the Director of Public Prosecutions. The prosecution authorities' inquiries are well advanced, and are proceeding as swiftly as possible under the superintendence of my right hon. and learned Friend the Attorney-General.
Our consistent view has been that publication of the report before those inquiries were completed would interfere with the principle that all citizens of this country are entitled to a fair trial of any criminal charges that may arise from it, and would prejudice the inquiries themselves. The Court of Appeal has unanimously agreed that it was reasonable for my right hon. and noble Friend to decide not to publish the report for the time being. The court's judgment is, however, the subject of a further appeal by Lonrho, which will be heard by the House of Lords next Monday.
In the meantime, as the House is aware, Lonrho is understood to have come into possession of a copy of the report on about 23 March, and The Observer newspaper, owned by Lonrho, published substantial extracts from it in a special edition on 30 March, coinciding with Lonrho's annual general meeting. Both Lonrho and The Observer are fully aware that only my right hon. and noble Friend has the lawful authority to publish the report; that Lonrho's copy was improperly given to it and improperly used by it; and that use by Lonrho and The Observer would amount to a grave breach of confidence and of Crown copyright and might prejudice next week's legal proceedings in the House of Lords.
For all these reasons, my right hon. and noble Friend sought and obtained an injunction on 30 March restraining The Observer and Lonrho from any further publication of the special edition. He is also seeking an order for the return of the remaining copies of the report, and urgent and thorough inquiries are being made to seek to establish how the report came into Lonhro's possession.
My right hon. and noble Friend has made it abundantly clear that the report will be published at the earliest

possible moment consistent with the even-handed administration of justice. The first principle in this matter must be to safeguard the proper investigation of possible criminal charges and the fair conduct of any trial should such charges be brought. I cannot believe that anyone in this House would wish to undermine that principle, or encourage others to do so.

Mr. Gould: What conceivable purpose can now be served by a continued refusal to publish the report? Is it not clear that the report has already been substantially published, that its contents are known to all those involved and affected, and that, rather than allow further publication to take place piecemeal and by drip-feed, with only the public kept in the dark, it would be better to come clean now? Is it not also clear that the Government's excuses simply do not stand up? How do they square with the admission by counsel for the Attorney-General that publication would not prejudice criminal investigations? If there were truly any substance in the argument that a fair trial would be prejudiced, bearing in mind the fact that any such trial may be years away, why did that not occur to the High Court when it considered the question? Has the Secretary of State himself not prejudiced the issue already by his admission on the radio this morning that the report discloses serious wrongdoing?
Is not the real reason an attempt to hide from the public the fact that the investigation of important takeover bids was in the hands of officials and Ministers who were incompetent and whose slap-happy attitude was no match for those who were determined to lie to them? If the inspectors' conclusion is that that sort of muddle must not be allowed to occur again, how can it be avoided without the benefit of the report and its recommendations? What confidence can we have in a Government who, instead of making amends for spectacular incompetence by coming clean, prefer to compound their errors by further incompetence and an all-too-typical recourse to cover-up?

Mr. Newton: If there were any wish to cover up, my right hon. and noble Friend would not have referred the report to the serious fraud office within a matter of days of having received it. When the hon. Gentleman suggests that there is no question of prejudicing a fair trial because the High Court made a finding in that respect, it seems to me to call into question the whole basis of the way in which we administer justice, in that three judges in the Court of Appeal subsequently found differently. That is the position at the moment.
As to the issue of serious wrongdoing, it is absolutely clear that, if there had not been evidence of wrongdoing in the report, it would not have been necessary or right to refer it to the Serious Fraud Office. Lastly, the hon. Gentleman asked me what purpose was to be served in view of what has happened. I will tell him what purpose is to be served. It is to seek to protect the fair administration of justice and the rule of law in this country. The Government cannot be absolved from that, nor should the House wish to be absolved from that, by the irresponsible behaviour of those who published the report in the way that they did.

Mr. Ivan Lawrence: Does not my right hon. Friend agree that the prior publication of evidence, for no better reason than to sell a newspaper or to pursue a personal vendetta, should never be a substitute for the proper prosecution of persons who are alleged to have


committed criminal offences? Is it not disgraceful how often Opposition Members side with those arrogant portions of the media who seek to place themselves above the law of the land?

Mr. Newton: I very much agree with the general tenor of my hon. and learned Friend's remarks. I must say fairly and squarely to the Opposition Front Bench that I do not believe that they would wish to prejudice the administration of justice. I hope that they will consider carefully the extent to which they may do so.

Mr. Gerald Bermingham: Perhaps the Minister will be kind enough to explain to me why, if the trial or potential trial of the A1-Fayeds could be prejudiced by the publication of the report, the same argument was not used in the case of the Guinness scandal or in the case of Mr. Ryan?

Mr. Newton: The issues arising from such a report must be considered in the context of the circumstances of each report, and they have been so considered. The issue of prejudice does not relate merely to proceedings on criminal charges should they be brought, but also to the hampering of current inquiries. Only last week there were signs that the publication of the report might make it impossible for inquiries to continue.

Mr. Jonathan Aitken: Will my right hon. Friend confirm that, under section 437 of the Companies Act 1985 the Secretary of State has an unfettered discretion to publish the report? If that is the case, does my right hon. Friend believe that it was wise for the noble Lord, Lord Young, to rely yesterday in the House of Lords on the statement that the prosecuting authorities would have to stop their inquiries if the report was published, when counsel for the Attorney-General said on the record in the Court of Appeal hearing that it was not true that prosecutions would have to be stopped as a result of publicity? Are we not in some confusion and in danger of entering into a second "Carry On, Spycatcher" saga?

Mr. Newton: The statement made by my right hon. and noble Friend in the House of Lords yesterday about the position of the prosecuting authorities was based on the latest statements which they had made to him and to the Department about what they thought would be the likely outcome of publication. I do not think that my right hon. and noble Friend can or should be absolved from taking that into account as a very important factor in exercising the discretion referred to by my hon. Friend.

Mr. Stuart Bell: Will the Chancellor of the Duchy not accept that there is a discrepancy between what he is telling the House today and what the noble Lord, Lord Young, told the House yesterday? The noble Lord made no reference to the prejudice to inquiries connected with criminal investigations; he simply said that there could not be a proper jury trial if the report was published. Is the Chancellor of the Duchy accountable to the House or to the Director of Public Prosecutions? Is the Chancellor telling the House that the report will not be published while criminal proceedings are pending, if the proceedings begin and if there are appeals? Is he telling the House that there is no prospect of forming a jury from all our citizens of jury age and status to hear the evidence in this case who have not read the report on the Fayeds' case?

Mr. Newton: I am saying to the House that it is not my right hon. and noble Friend's view that the report should be published in circumstances in which it could hamper inquiries, prevent inquiries being pursued or prejudice a fair trial following the outcome of those inquiries. That remains the position. With regard to the first part of the hon. Gentleman's question, I am afraid that he simply has not studied the statement made in the other place yesterday. My right hon. and noble Friend referred to the danger of inquiries being hampered and to the risk, at worst, that they might be brought to a halt by publication.

Mr. Richard Page: While one has to admire the determination of Mr. Rowland, does my right hon. Friend agree that as the noble Lord, Lord Young, has referred the matter to the serious fraud office, there is no intention of covering things up or putting them under the carpet? Does he also agree that to give in to the pressure to publish would set a precedent which others would follow when the Government's time scale does not suit their purpose?

Mr. Newton: Yes, I do, and I believe that that is the real issue which the House should address.

Mr. Charles Kennedy: Is it not ironic that a company which was once branded as the "unacceptable face of capitalism" has now, through its immense power and wealth, been able to further confirm what many people now regard to be the unacceptable face of the Government—a combination of shabby secrecy and downright inadequacy where the rigours of the marketplace are concerned? Far from hiding behind all the rhetoric about justice, is it not the case that, were it not for the fact that Lonrho could devote so many millions of pounds and call on its considerable influence and power in this country, many of the details would not have emerged in the first place? Where does individual justice in this country stand in that context?

Mr. Newton: The hon. Gentleman is simply not right to suggest that the details in this report will not at some stage emerge. The only issue is at what stage it is appropriate to publish a report in a way which is consistent with the basic principle of the fair administration of justice. If the hon. Gentleman does not adhere to that, I do not know what he is doing here.

Mr. Teddy Taylor: Will the Minister make it abundantly clear whether it is the intention of the Government to publish this report after the serious fraud office inquiries, which may be a few weeks, or the determination of any possible trials and appeals, which may be four or five years? Will the Minister also say, in view of the magnitude of the lies and deception referred to in the report, how he can possibly justify not referring this again to the Monopolies and Mergers Commission which was alone in having the right to recommend this investment? Finally, does he not think the points he makes about a fair trial undermine the very fair points the Government made, with the full support of this House, to Belgium and Eire, in exactly the contrary directions about Father Ryan?

Mr. Newton: My hon. Friend will be aware that my right hon. and noble Friend made a statement at the time that he decided not to refer the matter to the Monopolies and Mergers Commission and gave indications of why that


would not be appropriate. He also indicated, though, that it might be appropriate in due course for other steps to be taken in the light of the inspectors' report.

Mr. Brian Sedgemore: How does the Minister respond to the statement of Lord Justice Dillon that there is a public interest in knowing that the principal shareholders of the House of Fraser are fraudulent rogues, and a public interest in knowing how Ministers came to be deceived in 1985? Does the Minister intend to invite the Governor of the Bank of England to censure Kleinwort Benson for negligence, to invite the Law Society to censure Herbert Smith for incompetence, to invite Ministers to censure civil servants for naivety and to invite the Prime Minister to censure Ministers for negligence, incompetence and naivety?

Mr. Newton: The basic public interest in this matter is in the proper investigation of any offences such as the hon. Gentleman assumed had taken place, for proper decisions to be taken about whether criminal charges should be brought, and the proper hearing of those criminal charges should they be brought. That is what the Government are seeking to bring about.

Mr. Ian Gow: Since this exceptionally well-researched and detailed report has been in the possession of the police and the Attorney-General for more than seven months, when may we expect a decision to be taken on whether or not there is to be a prosecution?

Mr. Newton: I cannot be absolutely sure about that. The inquiries are being undertaken jointly by the serious fraud office and the Director of Public Prosecutions, with the help of the Metropolitan police. It is well known that investigations of this kind can take a great amount of time. I am encouraged, however, by the evidence that already exists that the establishment of the serious fraud office has significantly speeded these things up by comparison with what would have happened in earlier periods.

Several Hon. Members: rose——

Mr. Speaker: Order. I remind the House that this is a private notice question and we have a busy day ahead of us, with a Bill under a guillotine; I will therefore allow two more questions from either side.

Mr. D. N. Campbell-Savours: Is it not true that in 1976 Tiny Rowland and Lonrho went begging to the Department of Trade and Industry asking that the report on sanctions-busting and bribery in the case of Lonrho be not published? Why is it that the Lonrho broadsheet has refused to publish that particular information at this stage? Secondly, what business was it

of the DTI inspectors to examine the family background of the A1-Fayeds? Surely their terms of reference only related to whether they had the money to purchase the store. Is it not true that, despite all the discussion in the Lonrho broadsheet, Mr. Tiny Rowland and Mr. Donald Trelford have not produced one shred of evidence to date that the money to buy the House of Fraser was not the property of the A1-Fayeds alone? They have not produced that evidence. Indeed the report that was published equally states that the inspectors were unable to establish what the facts were. Does the Minister agree that that is the case?

Mr. Newton: The first half of the hon. Gentleman's question should be addressed to Lonrho rather than to a Minister at the Dispatch Box. The rest of the hon. Gentleman's question—I understand why—clearly seeks to draw me into commenting on what the hon. Gentleman says are the contents of the report. He will understand that, for reasons inherent in my statement, I am not prepared to be drawn into such comments.

Sir Anthony Grant: Is not the disturbing aspect of the affair not so much the unsavoury shenanigans about the ownership of a shop as the fact that it is yet another dismal example of dishonesty or gross negligence by the public servant who leaked the report? Does my right hon. Friend have the smallest hope that his inquiries will lead to the culprit?

Mr. Newton: The appropriate inquiries are well in train. I am afraid that I am not prepared to speculate about the timing or nature of the outcome.

Mr. Doug Hoyle: The Chancellor talks about prejudice, but does he agree that the Secretary of State for Trade and Industry prejudiced the case by saying that the report contained evidence of wrongdoing? Will he stop hiding behind a smokescreen, publish and be damned, whatever may be the consequences for former Ministers or officials?

Mr. Newton: No, I do not for a moment accept that. As I said earlier, if it were not plain that the findings of the report show possible wrongdoing there would have been no need to refer it to the serious fraud office and the DPP in the first place. That is clear.

Mr. James Arbuthnot: Is my right hon. Friend aware that the view of many, including myself, who read last week's special edition of The Observer is that it showed a surprising lack of objectiveness? Does he agree that, even on The Observer's own account, there was nothing in the report for the Monopolies and Mergers Commission, but there may have been something in it for the serious fraud office, and that is the department which is now considering it?

Mr. Newton: Yes, my hon. Friend makes a fair point.

Helicopter Crash (Report)

Mr. Frank Doran: I beg to ask leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific, urgent and important matter, namely,
the statement made by the Secretary of State for Transport or his Department yesterday that he intends to delay, at the request of the Boeing company, the publication of the report of the inquiry into the Chinook helicopter disaster".
In that disaster, 45 men were killed. It was the worst civil air disaster involving a helicopter and the delay in the publication of that report has caused extreme concern, particularly to those of my constituents with relatives who were involved in the disaster.
There has been no explanation for the delay in the publication of the report except the fact that Boeing has made its request because it appears to feel that it prejudices certain legal proceedings that are under way. I find that difficult to accept, for a number of reasons.
First, the majority of the facts in the case which were the subject of the investigation were canvassed in the Aberdeenshire court on the hearing of the fatal accident inquiry into the disaster in 1987. Secondly, the delay in publication prejudices the implementation of the report's findings. Some 30,000 men work in the North sea and travel to work by helicopter. If there are lessons to be learned, we want the report to be published so that those lessons can be implemented immediately.
Considerable anguish has been caused to relatives. I have spoken to one of those relatives, a constituent of mine, who lost her husband in the disaster. She is involved in legal action, both in this country and in the United States, against Boeing—together with all the other relatives who lost a loved one in the disaster. Those legal proceedings have caused considerable trauma. Part of the reason for the increase in that trauma is the failure to publish the report.
The publication date of 5 April has been known for many months, and legal proceedings have been further delayed as a result of the delay in the report's publication, causing considerable anguish. When I spoke to that lady this morning, she found it very difficult to believe that the only reason for non-publication is pressure from a multinational company. We have heard already today

about the suppression of reports and of the concern that that causes to the House and to the country at large. This appears to be another example of pressure from a multinational causing delay.
We all appreciate that inquiries and reports must be respected, believed and accepted by the general public, and that their integrity is extremely important. In this case, pressure from a multinational company to delay publication of a report must lead us to question its integrity. For all those reasons, the matter is of sufficient importance and urgency for me to request the Adjournment of the House to debate the matter.

Mr. Speaker: The hon. Member for Aberdeen, South (Mr. Doran) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the delayed publication of the report of the inquiry into the Chinook helicopter crash in the Shetlands in November 1986.
I listened with great care to the hon. Gentleman. As he knows, my sole duty in considering an application under Standing Order No. 20 is to decide whether it should be given precedence over the business set down for this evening or for tomorrow. I regret that the matter raised does not meet the requirements of Standing Order No. 20, so I cannot submit his application to the House.

Point of Order

Mr. Dennis Skinner: On a point of order, Mr. Speaker. You will know that a new parliamentary building is being prepared across the road from the House. I wonder what jurisdiction you have in that respect, because it was reported to me that, in order to celebrate 40 years of NATO, somebody hung up a banner proclaiming
Get out of NATO. No nukes here
which I thought was pretty good for a start. I wondered whether you, Mr. Speaker, had authorised that banner to be hung up, or whether it has something to do with honouring Gorbachev's visit.

Mr. Speaker: I have a pretty good view from my residence.

Mr. Skinner: Did you see that banner, Mr. Speaker?

Mr. Speaker: No, I did not see it.

Re-Enfranchisement of the People

Mr. Harry Barnes: I beg to move,
That leave be given to bring in a Bill to restore a full franchise.
Signs that electoral registration is not as healthy as it ought to be come from three sources: first, an examination of recent returns from electoral registration officers; secondly, comments from the Office of Population Censuses and Surveys—although I shall mention only one of them now; thirdly, an assessment of the impact and purposes of the poll tax legislation. Those combined sources show that we are heading for a democratic and constitutional crisis over the state of the franchise.
As to the evidence from electoral returns, in Scotland —where the poll tax has been a serious issue since the 1987 general election, causing the Tories to suffer many crushing defeats in that election—there has been an alarming drop in electoral registration. In each year from 1979 to 1987, there was a steady increase in the size of the Scottish electorate, yet 62,000 names have disappeared from the registers since 1987. That includes a drop of 25,000 in Glasgow, or 4·4 per cent. in the number previously registered. The loss of electors in Scotland seems to have little to do with demographic factors such as the balance between the death of electors and new 18-year-old electors being added to the register.
Commenting on the loss of electors between 1987 and 1988, when there was a loss of 27,500 in Scotland, the Office of Population Censuses and Surveys, in its "Electoral Statistics", published in 1988, said:
this does not appear to have arisen from demographic causes",
such as I have already mentioned. There has been little change in the number of 18-year-olds coming on to the register and no dramatic fall in the total population.
England and Wales have not yet been subjected to massive agitation on the poll tax but, with poll tax registration starting, that concern will dominate the coming county council and European elections. A drop in registration in England and Wales could follow. A recent MORI survey in Manchester showed that up to 10 per cent. of the people would refuse to register electorally as the poll tax and electoral registers are seen as linked, and are in fact linked. But even now, there could be something to hide about the 1989 electoral registration figures. Given that district council registration figures are to be published at the end of this month and constituency figures at the end of May, why can the House not be supplied with at least the district figures which are shortly to be published and which have been available locally since 15 February?
I raised this matter during business questions on 16 March and in a question for written answer on 28 February, when no information was supplied. It is also a matter that I have since pursued with the Leader of the House with no success. There are indications in areas such as Liverpool of serious worry about the number of people appearing on the electoral register, with perhaps as many as 10 per cent. having disappeared in the past year. This information is available and should be published and made available to the House so that hon. Members can examine its implications.
The main purpose of my Bill is to separate the poll tax register from the electoral register, making it illegal for poll

tax registrars to make use of electoral registers. This will only partly overcome the problem that I have highlighted, for poll tax registrars and electoral registrars can be the same persons, carrying information from each register in their heads. Only a full repeal of the poll tax legislation, which would be a major money Bill, can remove the evil of the inevitable link between the poll tax register and the electoral register.
The whole aim and purpose of the poll tax has been to attempt to fiddle the democratic and constitutional structure of this country. It has pushed poorer people off the register and continues to do so. It is taxing people to qualify them to vote, something which we have not seen since universal franchise was established here in 1918 and 1928—although before those dates there were such things as 40-shilling freeholds in the nineteenth century. It will destroy local government and civil liberties and will manipulate local government election results. It contains a centralising power of an outrageous kind. It taxes people against the norms of all western democratic systems, which is itself an abuse of democratic and constitutional government.
It is utterly disgusting that forms filled in for electoral registration purposes should be used for purposes not included on those forms. That principle extends beyond the poll tax, so my Bill will also outlaw the sale of electoral registers for commercial purposes or for any reasons other than electoral purposes. Many people add notes to their electoral registration forms, asking for their names to be kept away from commercial interests, but there is nothing that a returning officer can do about such requests. The law should respect that wish for all people, without their needing to ask for a special dispensation.
Past Government policy on local government finance and the current poll tax legislation also hit at the funds available for electoral registration officers to conduct their essential work. My Bill will ensure that registration officers receive adequate back-up facilities in terms of canvassing provisions to contact potential voters and assist them to complete their electoral returns.
Further encouragement can be given by positive leading advertising campaigns for registration by the Home Office, and my Bill will provide for that. Let us compare the limited advertising poster campaigns and leafleting on electoral registration with the campaign being conducted by Abbey National to get people to vote on turning the company into a plc. Let us compare the Government's expenditure on advertising the poll tax, the Education Reform Act and numerous other measures with the amount spent on extending the franchise. Money is often spent on measures before they become law. Let us compare the advertising expenditure on privatisation—for instance, on softening up the market for water and electricity—with what we spend on encouraging people to have the right to vote. Should not advertising the franchise be given similar attention?
I ask all democrats to support by Bill, which seeks to establish a universal franchise as far as is currently possible. To achieve its full aim, however, another Bill will have to be added to it, for the repeal of the poll tax—and its time will come.

Question put and agreed to.

Bill ordered to be brought in by Mr. Harry Barnes, Mr. Martin Redmond, Mr. Max Madden, Mr. Eric S. Heller,


Mr. Ken Livingstone, Mrs. Alice Mahon, Mr. Chris Mullin, Mr. Bernie Grant, Mr. Dennis Skinner, Mrs. Maria Fyfe, Mr. Jimmy Wray and Mr. Harry Cohen.

RE-ENFRANCHISEMENT OF THE PEOPLE

Mr. Harry Barnes accordingly presented a Bill to restore a full franchise: And the same was read the First time; and ordered to be read a Second time upon Friday 5 May and to be printed. [Bill 110.]

Orders of the Day — Water Bill

[3RD ALLOTTED DAY]

As amended (in the Standing Committee), considered.

Clause 163

PAYMENTS TO EXISTING PENSION FUND

The Parliamentary Under-Secretary of State for the Environment (Mr. Colin Moynihan): I beg to move amendment No. 89, in page 162, line 20, after 'who', insert—
'(a)'.

Mr. Speaker: With this we may take Government amendments Nos. 90 to 93.

Mr. Moynihan: The purpose of the first two amendments, Nos. 89 and 90, is to secure the future of pension payments of former officers or employees of the Water Research Centre, the Water Authorities Association, the Water Industry Training Association, British Water International Limited, the International Association on Water Pollution Research and Control and the International Water Supply Association, known collectively as "the admitted bodies".
As has already been announced, the water authorities superannuation fund will be administered from the transfer date by the National Rivers Authority, and this arrangement includes the second fund for the admitted bodies. The amendments proposed to clause 163 allow the Secretary of State to make orders designating the admitted bodies so that the powers and duties of the Secretary of State under that clause are extended to apply to their fund.
The purpose of the other three amendments in the group is to allow discretionary payments made by water authorities by analogy with pension payments and the unfunded pensions administered by the Severn-Trent water authority to be continued after privatisation of the water industry. These unfunded payments can be divided into three categories.
In addition to their obligations under the local government superannuation scheme, water authorities currently pay certain non-funded discretionary awards including gratuity awards, injury allowance, retirement compensation, added years pension enhancement, and a number of other benefits and associated pension increase payments to their own former employees and to employees of antecedent bodies.
They are also responsible for pensions and pension increase benefits to former National Water Council employees and board members and former water authority chairmen and members. These payments, except for a small proportion of non-funded discretionary awards, are administered by the Severn-Trent water authority and the cost recharged to each authority according to the incidence of payment or according to a statutory formula.
The second category is that of pension payments made directly by water authorities. Some pension payments are


made directly by water authorities, unlike those in the previous category which are administered by the Severn-Trent water authority, and the costs shared between authorities.
Then there is the important group of payments made by local authorities. Local authorities currently pay pensions increases, allowances and gratuities in respect of former employees whose employment functions were transferred to the water industry in 1974, and then recharge the cost to the water authorities.
Our objective in these amendments is to ensure that no pensioner is disadvantaged by the act of transfer of liability from a water authority to its successor company and that the responsibility for payment is clear both to the recipient and to the body which will be responsible for payment.
The amendments therefore provide broad powers to make regulations to encompass all people or classes of people in respect of whom such pensions and discretionary payments are made, and to impose a duty on the National Rivers Authority and on successor companies or nominated holding companies to continue to make payments awarded by water authorities.
Regulations which impose requirements on companies may be met only while the companies are wholly owned by the Crown. The administration for the first category of payments—that is, discretionary awards largely administered by Severn-Trent and unfunded pensions administered by Severn-Trent—will be transferred to the National Rivers Authority.
The amendments provide that the Secretary of State will be responsible for providing the funds, out of money supplied by Parliament, for payments made by the NRA, and the administration costs. In the other two categories —where local authorities make payments in respect of former employees and then recharge the cost to water authorities, and where water authorities are making pension payments directly to pensioners—the responsibilities for payment are clear to those concerned.
I see no reason to disturb those arrangements. On transfer date, those responsibilities will pass to the successor companies under schemes made under schedule 2 to the Bill. These amendments are designed to ensure that no pensioner is inadvertently disadvantaged by the transfer of liabilities.

Mr. Peter L. Pike: The Minister is making the position clear for existing pensioners. Does he agree that it is equally important for the Bill to include provisions to ensure that existing and future employees enjoy the same protection? That will not be the position.

Mr. Moynihan: I disagree with the hon. Gentleman's conclusion. He wants the Government to introduce proposals which will secure pension arrangements for those who retire in the future as good as the current pension arrangements under the local government superannuation scheme. We have repeatedly given assurances that a mirror image scheme, which we discussed at length in Committee, will not be approved by the Secretary of State unless it gives proper effect to the Government's commitment to provide employees with the same benefits.
I think that the hon. Member for Burnley (Mr. Pike) would like these arrangements to have statutory backing for the future. We have made it clear that we do not believe that, in the context of privatisation, such statutory backing would be appropriate. It is via the trustees that we intend to pursue pension arrangements for the future. Given the commitment that I have given on behalf of the Secretary of State, I can absolutely assure the hon. Gentleman that the trustees will, almost by definition, have a duty to pensioners. They could be sued for breach of trust if they did not, through the mirror image schemes, provide for pensioners in the future the same position as is accorded under the current arrangements.

Mr. Tim Boswell: I appreciate that the debate on this point is going on a little bit, but may I ask my hon. Friend whether it is not the case that, from now, if any employee is at any time dissatisfied with his pension arrangements, it will be open to him, as a result of recent legislation, to take out a personal pension as an alternative? That is an important safeguard, and a further measure of what might be called comparative competition in this respect.

Mr. Moynihan: What my hon. Friend has said about comparative competition is an imaginative and accurate reflection. The possibility of opting out and joining a water plc scheme is very definitely there. What we are looking at today is the alternative for the employees who do not wish to opt out.
In Committee and on the Floor of the House, hon. Members have argued very strongly that mirror image schemes must provide employees with the same benefits. When the money resolution was being debated on the Floor of the House, we said that a substantial amount of money—a figure of up to £800 million was mentioned—may be necessary in order to meet the commitment that I have given today.
Amendment No. 91, to clause 183, is consequential. The clause provides the transfer date as the commencement date for schedule 23 generally. The amendment makes an exception of subordinate legislation, permitting it to be made in advance of the transfer date.
I very much hope that the clarification of what are detailed and technical amendments, and my responses to hon. Members who have intervened, have assisted the House. What we are debating are effectively peripheral pension arrangements, and I hope that the House will welcome the additional assurances that have been given.

Ms. Joan Walley: Opposition Members believe that no pensioner should be disadvantaged as a result of this legislation. Taking at face value the particular changes that the Minister has outlined, we should not wish to quibble at all. I agree with my hon. Friend the Member for Burnley (Mr. Pike) that the certainties for pensioners should be applied equally to those people who are currently employed by water authorities.
What I want to know, specifically, is whether those people who have been transferred from the water authorities to the NRA will get exactly the same kind of treatment as other employees, given that, in respect of the


sale of shares in particular, they did not get the same treatment. I should welcome some clarification from the Minister on particular points concerning those people.

Mr. Pike: The amendments in this group are obviously very important. They affect the rights of existing pensioners, some of whom used to work for local authorities when those bodies were responsible for water services prior to reorganisation in 1974. Of course, there are pensioners who have retired since then, and there are people who have earned a lot of pension. We understand exactly what the Minister's amendments seek to do. They go some way towards clarifying the Bill as it was debated in Committee.
The Minister was absolutely right about the key part of my intervention a few moments ago. The crucial difference, of course, is the statutory protection for those people who currently work in the industry and for those who may come into it in the future. Certainly, the amendments do not go as far in that direction as we should like. It may be that the fall of the guillotine at 5.30 pm will make it impossible for us to reach an amendment in the next group. I hope that the Minister recognises that both Opposition Members and some Conservative Members are genuinely concerned about this matter, as are the employees in the industry.
Ministers have referred to the mirror image pension scheme. They are confident that the trustees will be able to protect employees, but many of us doubt whether that will happen. If the Ministers were right there would be no argument, but people who have worked for many years in the industry fear that, when the Bill becomes law, the agreements will be changed, that the documents that provide for future pension provision will not be so good as they are now and that there will be no mirror image pension scheme.
If the Secretary of State and the other Ministers really wanted a mirror image pension scheme to put in place, they could easily amend the Bill and introduce a statutory requirement that there should be such a scheme. The Government ought to be prepared to move in that direction because it would meet the fears of those who work in the industry. The Government need to go further than they have already gone if they are to gain the confidence of the workers in the industry.
The private water companies may prove to be the biggest cause for concern. There is no guarantee that employees will be able to become trustees of the pension schemes, although the trustees ultimately decide these matters. After privatisation, pensions and conditions of service will have to be negotiated between employers and trade unions on behalf of the employees. Ministers have given us many assurances during our debates. I was assured in Committee that the Government would not approve any scheme that did not meet our fears. Unless the Bill is amended to meet those fears, our predictions will be fulfilled. I hope, therefore, that the Government will be prepared to meet the genuine fears of the employees in the industry.

Mr. Richard Livsey: I welcome the amendments, particularly on behalf of former employees of the water authorities. In my constituency there are former employees of Severn-Trent and Welsh Water. I understand that the pension arrangements of

employees of Severn-Trent are different from those of other authorities. I hope that the Minister will take them into account.

Mr. Moynihan: I am happy to give the confirmation that the hon. Member for Brecon and Radnor (Mr. Livsey) has sought. Those differences will be taken fully into account and will be mirrored—hence the phrase "mirror image". I was passed a number of pieces of paper during the speech of the hon. Member for Burnley (Mr. Pike). I am slightly concerned that the collective age of the admirable experts who have assisted us throughout the passage of the Bill may be closer to retirement age than the collective age of the Opposition Front Bench spokesman and myself. With a bit of luck, our collective ages are still short of retirement age. That, however, has not denied us the opportunity to study this subject in great depth and to be able to respond without notes to the important points that have been raised.
It is appropriate to place on record a little more detail about the mirror image scheme. I understand the concerns of the hon. Member for Burnley. That is why we have sought new provisions to give the hon. Gentleman and others who are concerned about the scheme not being enshrined in legislation further reassurance.
It has been suggested that the Government's commitment to the preservation of existing pension rights and the adoption of future changes in the local government superannuation scheme in the mirror image scheme would be best ensured, as the hon. Member for Burnley said, by statutory provision. I mentioned earlier that that view does not accord with the principles of privatisation and has not been part of privatisation legislation.
It is customary in the private sector for pension schemes to be safeguarded under trust deed by trustees. This, therefore, is the way in which the mirror image scheme will operate. It would be anomalous to require a small number of companies in the private sector to be subject to legislative requirements for the running of a pension scheme for only some of their employees. We have repeatedly given assurances that the mirror image scheme will not be approved by the Secretary of State unless it gives proper effect to the Government's commitment that it will provide employees with the same benefits, including full index-linking, with the same level of employees' contributions at the transfer date.
It has always been our intention that water authority employees' pension rights should be safeguarded. We now propose that further security for future rights will be provided by the terms of the trust deed. We have agreed with all the chairmen of the water authorities to provisions which will give particular reassurance. These are, first, that the trustees of the mirror image scheme should include at least two representatives of members; and secondly, that while there remain potential beneficiaries of the mirror image scheme, it should not be wound up or its benefits altered if any trustee objects. Representatives of members are more appropriate than representatives of employees, because there will come a time when there are no employees in the scheme. They will all have retired but they will still be members of the scheme drawing their benefits from it.
I am specifically not requiring trustees to he representatives of trade union members, but I am not excluding that possibility if they happen to be appropriate


representatives of members. I am sure that hon. Members will agree that a pension scheme operated in this way will provide satisfactory assurance to employees who have chosen to transfer to the mirror image scheme.
NRA employees will continue in the local government superannuation scheme as if nothing had happened. In other words, there will be complete continuity.
I hope I have answered the two major points that have been raised.

Amendment agreed to.

Amendments made: No. 90, in page 162, line 21,, at end insert
'or

(b) have ceased to be officers or employees of any person designated for the purposes of this paragraph by order made by the Secretary of State.
(1A) The Secretary of State shall not make an order designating a person for the purposes of subsection (1)(b) above unless that person appears to him to be a person whose activities at any time before the transfer date consisted in, or were connected with, the carrying out of any function which is transferred by this Act or which corresponds to any such function or to any other function under this Act; and the power to make such an order shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.'.—[Mr. Moynihan].

Clause 164

GENERAL RESTRICTIONS ON DISCLOSURE OF INFORMATION

Amendments made: No. 36, in page 164, line 15 at end insert
'or to any information exclusively of a statistical nature'.—

No. 41, in page 164, line 21, at end insert—
'(6) Subject to subsection (7) below, nothing in this section shall preclude the disclosure of information—

(a) if the disclosure is of information relating to a matter connected with the carrying out of the functions of a water undertaker or sewage undertaker and is made by one Minister of the Crown or government department to another; or
(b) if the disclosure is for the purpose of enabling or assisting any public or other authority for the time being designated for the purposes of this section by an order made by the Secretary of State to discharge any functions which are specified in the order.

(7) The power to make an order under subsection (6) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and where such an order designates an authority for the purposes of paragraph (b) of that subsection, the order may—

(a) impose conditions subject to which the disclosure of information is permitted by virtue of that paragraph; and
(b) otherwise restrict the circumstances in which disclosure is so permitted.'—[Mr. Moynihan.]

Clause 178

GENERAL INTERPRETATION

Mr. Moynihan: I beg to move amendment No. 58, in page 171, line 29, leave out 'alongside' and insert
'in the close vicinity of'.

Mr. Speaker: With this it will be convenient to discuss Government amendment No. 59.

Mr. Moynihan: The amendments meet a commitment that I gave my hon. Friend the Member for Gainsborough

and Horncastle (Mr. Leigh) in Committee on 7 March. They make it clear that telecommunications apparatus for use solely in connection with the operation of undertakers' pipes may be laid not just alongside but generally in the close vicinity of pipes. Hon. Members who served on the Committee will no doubt recall our important debate there. I promised to look carefully at the point that my hon. Friend raised, not least because, as he pointed out, the water undertakers do not necessarily lay the equipment at the same time as the water main, and it is not necessarily very close. It may be as close as 2 m to the water main, but it may be as far away as five. As my hon. Friend mentioned, the problem with the original drafting of the Bill was that clause 178 made it clear that the equipment had to be placed alongside. We recognise that that is not necessarily in the interests of those who are placing the new telephone apparatus and who might want it to be above or underneath the main.

Amendment agreed to.

Amendment made: No. 59, in page 171, line 30, leave out 'alongside' and insert
'in the close vicinity of—[Mr. Moynihan.]

Clause 180

LOCAL STATUTORY PROVISIONS: CONSEQUENTIAL AMENDMENTS ETC

Amendment made: No. 57, in page 177, line 14, at end insert—
'(3A) Nothing in any order under this section may abrogate or curtail the effect of so much of any local statutory provision as confers any right of way or confers on or preserves for the public—

(a) any right of enjoyment of air, exercise or recreation on land; or
(b) any right of access to land for the purposes of exercise or recreation.'.—[Mr. Moynihan.]

Clause 183

SHORT TITLE, COMMENCEMENT AND EXTENT

Amendment made: No. 91, in page 179, line 1, after '23', insert
'except so far as relating to the making of subordinate legislation'.—[Mr Moynihan.]

Amendment made: No. 11—new schedule—

'WATER QUALITY IN SCOTLAND

1. In the Water (Scotland) Act 1980, after section 76, there shall be inserted the following Part—

"PART VIA
QUALITY OF WATER

Duties of water authorities with respect to water quality.

76A.—(1) It shall be the duty of a water authority—

(a) when supplying water to any premises for domestic purposes to supply only water which is wholesome at the time of supply; and
(b) so far as reasonably practicable, to ensure, in relation to each source or combination of sources from which that authority supplies water to premises for domestic purposes, that there is, in general, no deterioration in the quality of the water which is supplied from time to time from that source or combination of sources.

(2) For the purposes of this section and section 76B below and subject to subsection (3) below, water supplied by a water authority to any premises shall not be regarded as unwholesome at the time of supply where it has ceased to be wholesome only after leaving the authority's pipes.

(3) For the purposes of this section where water supplied by a water authority to any premises would not otherwise be regarded as unwholesome at the time of supply, that water shall be regarded as unwholesome at that time if—

(a) it has ceased to be wholesome after leaving the authority's pipes but while in a pipe which is subject to water pressure from a main or which would be so subject but for the closing of some valve; and
(b) it has so ceased in consequence of the failure of the authority, before supplying the water, to take such steps as may be prescribed for the purpose of securing the elimination or reduction to a minimum of any prescribed risk that the water would cease to be wholesome after leaving the authority's pipes.

(4) The provisions of this section shall apply in relation to water which is supplied by a water authority whether or not the water is water which the authority is required to supply by virtue of any provision of this Act.

Regulations for preserving water quality

76B.—(1) The Secretary of State may by regulations require a water authority to take all steps as may be prescribed for the purpose of securing compliance with section 76A above; and, without prejudice to the generality of that power, regulations under this subsection may impose an obligation on a water authority—

(a) to take all such steps as may be prescribed for monitoring and recording whether the water which that authority supplies to premises for domestic purposes is wholesome at the time of supply;
(b) to take all such steps as may be prescribed for monitoring and recording the quality of the water from any source, or combination of sources, which that authority uses or is proposing to use for supplying water to any premises for domestic purposes;
(c) to ensure that a source which that authority is using or proposing to use for supplying water for domestic purposes is not so used until prescribed requirements for establishing the quality of water which may be supplied from that source have been complied with;
(d) to keep records of the localities within which all the premises supplied with water for domestic purposes by that authority are normally supplied from the same source or combination of sources;
(e) to comply with prescribed requirements with respect to the analysis of water samples or with respect to internal reporting or organisational arrangements.

(2) Without prejudice to subsection (1) above, the Secretary of State may by regulations make provision with respect to the use by water authorities, for the purposes of or in connection with the carrying out of their functions, of such processes and substances, and of products that contain or are made with such substances or materials, as he considers might affect the quality of any water; and, without prejudice to the generality of that power, regulations under this subsection may—

(a) forbid the use by water authorities of processes, substances and products which have not been approved under the regulations or which contravene the regulations;
(b) for the purpose of provision made by virtue of paragraph (a) above, require processes, substances and products used by water authorities to conform to such standards as may be prescribed by or approved under the regulations;
(c) impose such other requirements as may be prescribed with respect to the use by water authorities of prescribed processes, substances and products;
(d) provide for the giving, refusal and revocation, by prescribed persons, of approvals required for the purposes of the regulations, for such approvals to be capable of being made subject to such conditions as may be prescribed and for the modification and revocation of any such condition;
(e) impose obligations to furnish prescribed persons with information reasonably required by those persons for the purpose of carrying out functions under the regulations; and

(f) require prescribed charges to be paid to persons carrying out functions under the regulations.

(3) The Secretary of State may by regulations require a water authority—

(a) to publish information about the quality of water supplied for domestic purposes to any premises by that authority; and
(b) to provide information to prescribed persons about the quality of water so supplied.

(4) Regulations under subsection (3) above—

(a) shall prescribe both the information which is to be published or provided in pursuance of the regulations and the manner and circumstances in which it is to be published or provided;
(b) may require the provision of information by a water authority to any person to be free of charge or may authorise it to be subject to the payment by that person to the authority of a prescribed charge; and
(c) may impose such other conditions on the provision of information by a water authority to any person as may be prescribed.

Provision of water where piped supplies insufficient or unwholesome

76C.—(1) Where—

(a) it is not practicable at reasonable cost for a water authority, by supplying water in pipes, to provide or maintain such a supply of wholesome water to any particular premises in its limits of supply as (so far as those premises are concerned) is sufficient for domestic purposes;
(b) it is practicable at reasonable cost for the authority to provide such a supply to those premises otherwise than in pipes;
(c) the insufficiency or unwholesomeness of the supply of water for domestic purposes to those premises is such as to cause a danger to life or health; and
(d) the local authority in whose area those premises are situated notify the water authority of that danger and require the water authority to provide a supply otherwise than in pipes,
it shall be the duty of the water authority, for such period as may be required by that local authority, to provide any supply to those premises which it is practicable at reasonable cost to provide otherwise than in pipes and which it is required to provide by that local authority.

(2) Where under subsection (1) above a local authority require the provision by a water authority of a supply of water to any premises, that local authority—

(a) shall be liable to the water authority for any charges payable in respect of the provision of that supply; but
(b) shall have power to recover the whole or any part of any charges paid by virtue of this subsection from the owner or occupier of the premises to which the supply is provided.

(3) In this section references to the provision of a supply of water to any premises otherwise than in pipes shall have effect, in a case in which it is practicable at reasonable cost to provide a supply (whether or not in pipes) to a place within a reasonable distance of those premises, as including references to the provision of a supply to that place.

Enforcement of sections 76A to 76C

76D.—(1) This section applies to enforcement of the duties of water authorities under sections 76A and 76C(1) and under regulations made under section 76B.

(2) Without prejudice to its generality, section 11 above (power of Secretary of State to make a default order) shall have effect, subject to the following provisions of this section, for the enforcement by the Secretary of State of the duties referred to in subsection (1) above.

(3) The Secretary of State may make an order under subsection (2) of section 11 without having caused a local inquiry to be held into the matter.

(4) The Secretary of State shall not make an order under subsection (2) of section 11 if he is satisfied—

(a) that the failures complained of were of a trivial nature; or
(b) that the water authority have agreed to take and are taking all such steps as it appears to the Secretary of


State to be appropriate, for the time being, for them to take for the purpose of securing or facilitating compliance with these duties.

General functions of local authorities
in relation to water quality

76E.—(1) It shall be the duty of every local authority to take all such steps as they consider appropriate for keeping themselves informed about the wholesomeness and sufficiency of water supplies provided to premises in their area, including every private supply to any such premises.

(2) It shall be the duty of a local authority to notify any water authority of anything appearing to the local authority to suggest—

(a) that any supply by that water authority of water for domestic purposes to any premises in the area of that local authority is, has been, or is likely to become unwholesome or (so far as any such premises are concerned) insufficient for those purposes;
(b) that the unwholesomeness or insufficiency of any such supply is, was or is likely to be such as to cause a danger to life or health; or
(c) that the duty imposed on that undertaker by virtue of section 76A(1)(b) above is being, has been or is likely to be so contravened as to affect any supply of water to premises in that area;
and it shall be the duty of a local authority to require the provision of a supply in pursuance of section 76C above whenever, in a case falling within paragraph (a) of subsection (1) of that section, it is satisfied, in relation to any premises in their area, as to the matters specified in paragraphs (b) and (c) of that subsection.

(3) Where a local authority have notified a water authority of any such matter as is mentioned in subsection (2) above, it shall be the duty of that local authority, if they are not satisfied that all such remedical action as is appropriate will be taken by the water authority, to inform the Secretary of State about the contents of the notification.

(4) It shall be the duty of a local authority to comply with any direction given by the Secretary of State to that local authority or to local authorities generally as to—

(a) the cases and circumstances in which they are or are not to exercise any of the powers conferred on them by this Part in relation to private supplies; and
(b) the manner in which those powers are to be exercised.

(5) The Secretary of State may by regulations make such provision, supplementing the provisions of this section, as he considers appropriate for—

(a) imposing duties and conferring powers on local authorities with respect to the acquisition of information about the quality and sufficiency of water supplies provided to premises in their areas; and
(b) regulating the performance of any duty imposed by or under this section.

Without prejudice to the generality of subsection (5) above, regulations under that subsection may—

(a) prescribe the matters to be taken into account by a local authority in determining, for the purposes of subsection (1) above, what is appropriate;
(b) provide, for the purposes of the exercise or performance of any power or duty conferred or imposed on a local authority by or under this section, for such samples of water to be taken and analysed at such times and in such manner as may be prescribed;
(c) authorise local authorities to exercise or perform any such power or duty through prescribed persons;
(d) provide for the recovery by a local authority, from prescribed persons, of such amounts as may be prescribed in respect of expenses reasonably incurred by the authority in the exercise of any such power or the performance of any such duty.

REMEDIAL POWERS OF LOCAL AUTHORITIES IN RELATION TO PRIVATE SUPPLIES

—(1) Subject to the following provisions of this

section, where a local authority are satisfied in relation to any premises in their area which are supplied with water for domestic purposes by means of a private supply—

(a) that any water which is being, has been or is likely to be supplied for those purposes to those premises by means of that private supply is not, was not or, as the case may be, is not likely to be wholesome; or
(b) that that private supply is failing, has failed or is likely to fail to provide to any house on those premises such a supply of wholesome water as (so far as that house is concerned) is sufficient for domestic purposes,
the local authority may serve a notice in relation to that private supply on one or more of the relevant persons.

(2) A notice under this section in relation to a private supply of water to any premises shall—

(a) give particulars of the matters mentioned in subsection (1) above in respect of which the notice is served;
(b) specify the steps which, in the opinion of the local authority serving the notice, are required to be taken for ensuring that there is a supply of water to those premises which is both wholesome and (so far as any house on those premises is concerned) sufficient for domestic purposes;
(c) specify a period ending not less than 28 days after the day on which the notice is served within which any representations or objections with respect to the notice must be received by that local authority; and
(d) state the effect in relation to that notice of section 76G(2) and (3) below.

(3) Subject to section 76G below, where a local authority serve a notice under this section on any relevant person they may do one or more of the following, that is to say—

(a) by that notice designate as steps to be taken by the authority themselves such of the steps specified in the notice as they consider it appropriate to so designate;
(b) by that notice require that person, within such reasonable period as may be specified in the notice, to take one or more of the steps so specified;
(c) by that notice require that person, at such times as may be determined in accordance with provision contained in the notice, to make to another relevant person or to that authority such payments as may be so determined in respect of expenses reasonably incurred by that other person or that authority in taking any step specified in the notice;
(d) by that notice undertake from time to time to make such payments to that person as may be so determined in respect of expenses reasonably incurred by that person in taking any step specified in the notice.

(4) The power of a local authority to serve a notice under this section specifying the steps which are required to be taken in relation to any source from which a private supply is provided both to premises in the area of that authority and to premises in the area of another local authority shall be exercisable only where—

(a) the other authority consent to the service of the notice; or
(b) the authorities act jointly in exercising their respective powers under this section in relation to that source.

(5) The powers conferred by this section and section 76G below shall be so exercised in relation to a private supply of water to any premises where there is no house as to secure that no local authority are required to bear any of the expenses incurred (whether by the authority or by any other person) in taking any steps for ensuring that the supply is wholesome which are specified in any notice under this section.

(6) The steps that a relevant person may be required by a notice under this section to take in relation to any premises shall include—

(a) requiring a supply of water to be provided to those premises by a water authority or by any other person; and


(b) taking such steps for the purpose of securing that such a requirement is complied with, and of enabling such a supply to be so provided, as may be specified in the notice.

(7) For the purposes of this section and section 76G below the relevant persons, in relation to a private supply of water to any premises in the area of a local authority, are the owners and occupiers of those premises and (whether or not the source of the private supply is in that authority's area) the owners and occupiers of the premises where that source is situated and any other person who exercises powers of management or control in relation to that source.

Effect confirmation and variation of notice under section 76F

76G.—(1) Subject to subsection (2) below, a notice served by a local authority under section 76F above shall not take effect until the end of the period specified in the notice as the period within which representations or objections with respect to the notice must be received by that authority.

(2) Where any written representation or objection with respect to a notice by a local authority under section 76F above is received by the authority, before the end of the period specified in the notice, from a person on whom the notice was served, that notice shall not take effect unless—

(a) the notice is submitted by the authority to the Secretary of State and is confirmed by him either with or without modifications; or
(b) the representation or objection is withdrawn.

(3) If a local authority submit a notice under section 76F above to the Secretary of State for confirmation, the Secretary of State—

(a) shall consider whether the notice should be confirmed and whether, if it is confirmed, it should be confirmed with or without modifications;
(b) may, with respect to the matters specified in the notice or any proposed modification of it, direct the local authority to serve a notice under section 76F above, in such terms as may be specified in the direction, on any relevant person who has not previously been so served;
(c) may, for the purposes of paragraph (a) or (b) above—

(i) cause a local inquiry to be held; or
(ii) afford to the local authority and to every person who has made representations or objections with respect to the notice or a proposed direction under paragraph (b) above an opportunity of appearing before, and being heard by, a person appointed by the Secretary of State for the purpose;
and
(d) if he is satisfied that the person on whom any notice to be served in pursuance of a direction under paragraph (b) above has had a proper opportunity of having his representations or objections with respect to the proposal for the direction considered, dispense in relation to the notice so served with the provisions of subsections (1) and (2) above and of section 76F(2)(c) and (d) above.

(4) Where the Secretary of State confirms a notice under section 761' above (whether with or without modifications)—

(a) he, or if he so directs, the local authority concerned shall serve notice of that confirmation on every person originally served with the notice under that section; and
(b) that notice shall take effect, with any modifications made by the Secretary of State, at such times as may be specified in the notice served under this subsection.

(5) Where any relevant person who is required by virtue of a notice under section 76F above to take any step in relation to any premises fails to take that step within the period specified in the notice, the authority which served the notice may, in accordance with any applicable provision having effect by virtue of section 76H below, take that step themselves.

(6) Where any step is taken by a local authority in relation to any premises by virtue of subsection (5) above—


(a) the authority may recover from the person who failed to take that step within the specified period any expenses reasonably incurred by the authority in taking that step; and
(b) for the purposes of any requirement under which payments are required to be made to that person by any person other than the authority, sums paid by virtue of paragraph (a) above in respect of the taking of any step shall be deemed to be expenses incurred in the taking of that step by the person who failed to take it.

(7) Nothing in this Act shall confer any right of action on any person in respect of any loss or damage sustained by t hat person in consequence of the failure by any other person to take any step specified in a notice under section 76F above; but any sum required to be paid to any person by virtue of any requirement or undertaking contained in such a notice shall be recoverable by that person from the person who is required to pay it.

(8) Any requirement which is imposed by virtue of a notice under section 76F above on the owner or occupier of any premises and is expressed to bind those premises in relation to the owners or occupiers from time to time shall bind successive owners or, as the case may be, occupiers of those premises; and section 65 above (power of local authority to make a charging order in respect of costs) shall apply to a requirement under section 64 above.

(9) Subject to subsection (10) below, a local authority may be notice served on any person modify or revoke the effect in relation to that person of any notice under section 76F above or this subsection (including a notice which has been confirmed, with or without modifications, by the Secretary of State).

(10) Section 76F(2)(c) and (d) and subsections (1) to (4) above shall apply, as they apply in relation to a notice under section 76F above, in relation to any notice served by a local authority on any person under subsection (9) above except where the notice—

(a) extends the period within which any step is required to be taken by that person; or
(b) discharges, postpones or abates any obligation of that person to make a payment to the local authority.

Incidental powers of local authorities

76H.—( 1) Subject to subsection (5) below, a local authority may serve on any person a notice requiring him to furnish that authority, within a period or at times specified:in the notice and in a form and manner so specified, with such information as is reasonably required by that authority for the purpose of exercising or performing any power or duly conferred or imposed on that authority by or under any of sections 76E to 76G above.

(2) Any person designated in writing for the purpose by any local authority may—

(a) enter any premises for the purpose, in relation to any private supply, of—

(i) determining whether, and if so in what manner, any power or duty conferred or imposed on that authority by or under any of sections 76E to 76G above should be exercised or performed; or
(ii) exercising any such power or performing any such duty;
(b) enter any premises to which a supply of water is provided by a water authority for the purpose, in relation to a supply so provided, of determining whether, and if so in what manner, such a power should be exercised or such a duty performed or of exercising such a power or performing such a duty or
(c) carry out such inspections, measurements and tests on premises entered by that person or of articles found on any such premises, and take away such samples of water or of any land or articles, as the local authority—

(i) consider appropriate for the purposes of any such power or duty; and
(ii) have authorised that person to carry out or take away,


and the provisions of subsections (3) to (7) of section 38 shall apply to the right of entry given by this subsection to any person designated by a local authority as they apply to the right of entry of an authorised officer of a water authority.

(3) Entry into any premises shall not be demanded as of right by virtue of this section except—

(a) in an emergency, or
(b) at a reasonable time and after 24 hours' notice of the intended entry has been given to the occupier of the premises.

(4) The Secretary of State may by regulations make provision for restricting the information which may be required under subsection (1) above and for determining the form in which the information is to be so required.

(5) A person who fails without reasonable excuse to comply with the requirements of a notice served on him under subsection (1) above shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

Standards of wholesomeness

76I.—(1) The Secretary of State may by regulations make provision that water that is supplied to any premises is or is not to be regarded as wholesome for the purposes of this Part if it satisfies or, as the case may be, fails to satisfy such requirements as may be prescribed.

(2) Without prejudice to the generality of subsection (1) above, regulations under this section may, for the purpose of determining the wholesomeness of any water—

(a) prescribe general requirements as to the purposes for which the water is to be suitable;
(b) prescribe specific requirements as to the substances that are to be present in or absent from the water and as to the concentrations of substances which are or are required to be present in the water;
(c) prescribe specific requirements as to other characteristics of the water;
(d) provide that the question whether prescribed requirements are satisfied may be determined by reference to such samples as may be prescribed;
(e) enable the Secretary of State to authorise such relaxations of and departures from the prescribed requirements (or from any of them) as may be prescribed, to make any such authorisation subject to such conditions as may be prescribed and to modify or revoke any such authorisation or condition; and
(f) enable the Secretary of State to authorise a local authority (either instead of the Secretary of State or concurrently with him) to exercise in relation to a private supply any power conferred on the Secretary of State by regulations made by virtue of paragraph (e) above.

Power to give effect to international obligations

76J. The Secretary of State may by regulations provide that the provisions of this Part shall have effect with such modifications as may be prescribed for the purpose of enabling Her Majesty's Government in the United Kingdom to give effect to—

(a) any Community obligations; or
(b) any international agreement to which the United Kingdom is for the time being a party.

Interpretation etc. of Part VIA.

76K.—(1) In this Part—

'analyse', in relation to any sample of land or water, includes subjecting the sample to a test of any description, and cognate expressions shall be construed accordingly;
'local authority' means an islands or district council;
'private supply' means, subject to subsection (2) below, a supply of water provided otherwise than by a water authority (including a supply provided for the purposes of the bottling of water) and cognate expressions shall be construed accordingly;
'substance' includes micro-organisms and any natural or artificial substance or other matter, whether it is in solid or liquid form or in the form of a gas or vapour.;
'wholesome' and cognate expressions shall be construed subject to the provisions of any regulations made under section 76I.

(2) For the purposes of any reference in this Part to a private supply, or to supplying water by means of a private supply, water shall be treated as supplied to any premises not only where it is supplied from outside those premises, but also where it is abstracted, for the purpose of being used or consumed on those premises, from a source which is situated on the premises themselves; and for the purposes of this subsection water shall be treated as used on any premises where it is bottled on those premises for use or consumption elsewhere.

(3) The rights conferred by virtue of this Part as against the owner or occupier of any premises shall be without prejudice to any rights and obligations, as between themselves, of the owner and occupier of the premises in question.".'.—[Mr. Moynihan.]

Amendment made: No. 88—new schedule—

'CONTROL OF POLLUTION IN SCOTLAND

1. The Control of Pollution Act 1974 as it applies to Scotland is amended in accordance with the provisions of this Schedule.

2. In subsection (4) of section 4 (meaning of "land"), for the words "in a stream" there shall be substituted the words "in controlled waters".

3. In subsection (9) of section 11, for the words "relevant waters" there shall be substituted the words "controlled waters".

4. For sections 31 to 42 there shall be substituted the following sections—

General provisions
Waters to which Part II applies

30A.—(1) This part applies to any waters (in this Part referred to as 'controlled waters') of any of the following classes—

(a) relevant territorial waters, that is to say, subject to subsection (5) below, the waters which extend seaward for three miles from the baselines from which the breadth of the territorial sea adjacent to Scotland is measured;
(b) coastal waters, that is to say, any waters which are within the area which extends landward from those baselines as far as the limit of the highest tide or, in the case of the waters of any relevant river or watercourse, as far as the fresh-water limit of the river or watercourse, together with the waters of any enclosed dock which adjoins waters within that area;
(c) inland waters, that is to say, the waters of any relevant loch or pond or of so much of any relevant river or watercourse as is above the fresh-water limit:
(d) ground waters, that is to say, any waters contained in underground strata, or in—

(i) a well, borehole or similar work sunk into underground strata, including any adit or passage constructed in connection with the well, borehole or work for facilitating the collection of water in the well, borehole or work; or
(ii) any excavation into underground strata where the level of water in the excavation depends wholly or mainly on water entering it from the strata.

(2) The Secretary of State—

(a) shall deposit maps with each river purification authority showing what appear to him to be the fresh-water limits of every relevant river or watercourse in the area of that authority; and
(b) may from time to time, if he considers it appropriate to do so be reason of any change of what appears to him to be the fresh-water limit of any river or watercourse, deposit a map showing a revised limit for that river or watercourse;
and in subsection (1) above 'fresh-water limit', in relation to any river or watercourse, means the place for the time being shown as the fresh-water limit of that river or watercourse in the latest map deposited for that river or watercourse under this subsection.

(3) It shall be the duty of each river purification authority to keep any maps deposited with it under subsection (2) above available, at all reasonable times, for inspection by the public free of charge.

(4) in this section—

'miles' means international nautical miles of 1,852 metres;
'loch or pond' includes a reservoir of any description;
'relevant loch or pond' means (subject to subsection (5) below) any loch or pond which (whether it is natural or artificial or above or below ground) discharges into a relevant river or watercourse or into another loch or pond which is itself a relevant loch or pond;
'relevant river or watercourse' means any river or watercourse (including an underground river or watercourse and an artificial river or watercourse) which is neither a public sewer nor a sewer or drain which drains into a public sewer.

(5) The Secretary of State may by order provide—

(a) that any area of the territorial sea adjacent to Scotland is to he treated as if it were an area of relevant territorial waters for the purposes of this Part;
(b) that any loch or pond which does not discharge into a relevant river or watercourse or into a relevant loch or pond is to be treated for those purposes as a relevant loch or pond.

(6) The power of the Secretary of State to make an order under subsection (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and such an order may—

(a) contain such supplemental, consequential and transitional provision as the Secretary of State considers appropriate; and
(b) for the purposes of any provision made by virtue of paragraph (a) above, make different provision for different cases, including different provision in relation to different persons, circumstance or localities.

Classification of quality of waters

30B.—(1) The Secretary of State may, in relation to any description of controlled waters (being a description applying to some or all of the waters of a particular class or of two or more different classes), by regulations prescribe a system of classifying the quality of those waters according to criteria specified in the regulations.

(2) The criteria specified in regulations under this section in relation to any classification shall consist of one or more of the following, that is to say—

(a) general requirements as to the purposes for which the waters to which the classification is applied are to be suitable;
(b) specific requirements as to the substances that are to be present in or absent from the water and as to the concentrations of substances which are or are required to be present in the water;
(c) specific requirements as to other characteristics of those waters;
and for the purposes of any such classification regulations under this section may provide that the question whether prescribed requirements are satisfied may be determined by reference to such samples as may be prescribed.

Water quality objectives

30C.—(1) For the purpose of maintaining and improving the quality of controlled waters the Secretary of State may, by serving a notice on a river purification authority specifying—

(a) one or more of the classifications for the time being prescribed under section 30B above; and
(b) in relation to each specified classification, a date, establish the water quality objectives for any waters within the area of that authority which are, or are included in, waters of a description prescribed for the purposes of that section.

(2) The water quality objectives for any waters to which a notice under this section relates shall be the satisfaction by those waters, on and at all times after each date specified in the notice, of the requirements which at the time of the notice were the requirements for the classification in relation to which that date is so specified.

(3) Where the Secretary of State has established water quality objectives under this section for any waters he may review objectives for those waters if—

(a) five years or more have elapsed since the service of the last notice under subsection (1) or (6) of this section to he served in respect of those waters; or

(b) the river purification authority on which that notice has been served, after consultation with such persons as it considers appropriate, requests a review;
and the Secretary of State shall not exercise his power to establish objectives for any waters by varying the existing objectives for those waters except in consequence of such a review.

(4) Where the Secretary of State proposes to exercise his power under this section to establish or vary the objectives for any waters in the area of a river purification authority he shall—

(a) give notice to that authority setting out his proposal and specifying the period (not being less than three months from the date of publication of the notice) within which representations with respect to the proposal may be made; and
(b) consider any representations which are duly made; and if he decides, after considering any such representations, to exercise his power to establish or vary those objectives, he may do so either in accordance with the proposal contained in the notice or in accordance with that proposal as modified in such manner as he considers appropriate.

(5) A notice under subsection (4) above shall be given—

(a) by publishing the notice in such manner as the Secretary of State considers appropriate for bringing it to the attention of persons likely to he affected by it; and
(b) by serving a copy of the notice on the authority.

(6) If, on a review under this section or in consequence of any representations made following such a review for the purposes of subsection (4) above, the Secretary of State decides that the water quality objectives for any waters in the area of a river purification authority should remain unchanged, he shall serve notice of that decision on that authority.

General duties to achieve and maintain objectives etc.

30D.—(1) It shall be the duty of the Secretary of State and of each river purification authority to exercise the powers conferred on him or it by or under the following provisions of this Part or the provisions of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965 in such manner as ensures, so far as it is practicable by the exercise of those powers to do so, that the water quality objectives specified for any waters in a notice under section 30C above are achieved at all times.

(2) It shall be the duty of each river purification authority, for the purposes of the carrying out of its functions under the following provisions of this Part or the provisions of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965, to monitor the extent of pollution in controlled waters.

Control of entry of polluting matter and effluents into water
Control of pollution of rivers and coastal waters etc.

31.—(1) Subject to subsections (2) and (3) of this section, a person shall be guilty of an offence if he causes or knowingly permits—

(a) any poisonous, noxious or polluting matter to enter controlled waters; or
(b) any matter to enter any inland waters so as to tend (either directly or in combination with other matter which he or another person causes or permits to enter those waters) to impede the proper flow of the waters in a manner leading or likely to lead to a substantial aggravation of pollution due to other causes or of the consequences of such pollution; or
(c) any solid waste matter to enter controlled waters

(2) A person shall not be guilty of an offence by virtue of the preceding subsection if—

(a) the entry in question is authorised by, or is a consequence of an act authorised by, a disposal licence or a consent given by the Secretary of State or a river purification authority in pursuance of this Act and the entry or act is in accordance with the conditions, if any, to which the licence or consent is subject; or
(b) the entry in question is authorised by, or is a consequence of an act authorised by—

(i) section 33 of the Water (Scotland) Act 1980 (which among other things relates to


temporary discharges by water authorities in connection with the construction of works) or any prescribed enactment, or
(ii) any provisions of a local Act or statutory order which expressly confers powers to discharge effluent into water, or
(iii) any licence granted under Part II of the Food and Environment Protection Act 1985; or
(c) the entry in question is caused or permitted in an emergency in order to avoid danger to the public and—

(i) he takes all such steps as are reasonably practicable in the circumstances for minimising the extent of the entry in question and of its polluting effects; and
(ii) as soon as reasonably practicable after the entry occurs, particulars of the entry are furnished to the river purification authority in whose area it occurs; or
(d) the matter in question is trade or sewage effluent discharged as mentioned in paragraph (a) of subsection (1) of section 32 or matter discharged as mentioned in paragraph (b) or (c) of that subsection and the entry in question is not from a vessel;
and a person shall not be guilty of an offence by virtue of the preceding subsection by reason only of his permitting water from an abandoned mine to enter controlled waters.

(3) A person shall not by virtue of paragraph (b) or (c) of subsection (1) of this section be guilty of an offence by reason of his depositing the solid refuse of a mine or quarry on any land so that it falls or is carried into inland waters if—

(a) he deposits the refuse on the land with the consent (which shall not be unreasonably withheld) of the river purification authority in whose area the land is situated; and
(b) no other site for the deposit is reasonably practicable; and
(c) he takes all reasonably practicable steps to prevent the refuse from entering those inland waters.

(4) Where it appears to the Secretary of State that, with a view to preventing poisonous, noxious or polluting matter from entering any controlled waters, it is appropriate to prohibit or restrict the carrying on in a particular area of activities which he considers are likely to result in pollution of the waters, then, subject to subsection (5) below, he may by regulations—

(a) designate that area; and
(b) provide that prescribed activities shall not be carried on at any place within the area except with the consent (which shall not be unreasonably withheld) of the river purification authority in whose area the place is situated and in accordance with any reasonable conditions to which the consent is subject;
(c) provide that a contravention of the regulations shall be an offence and prescribe the maximum penalty for the offence; and
(d) make provision for the imposition by river purification authorities of charges in respect of the consent mentioned in paragraph (b) above.

(5) It shall be the duty of the Secretary of State, before he makes any regulations under subsection (4) above—

(a) to publish in the Edinburgh Gazette and in at least one newspaper circulating in the area in question a copy of the proposed regulations and a notice specifying—

(i) a period of not less than twenty-eight days, beginning with the date on which the notice is first published, within which objections to the proposed regulations may be made, and
(ii) the person to whom such objections may be made; and
(b) to consider any objections to the proposed regulations which are made within that period and, if such an objection is so made by a prescribed person and is not withdrawn, to cause a local inquiry to be held in pursuance of section 96 of this Act with respect to the proposed regulations;
and the Secretary of State may, after considering any such objections as are mentioned in paragraph (b) of this

subsection and the report of any person appointed to hold a local inquiry with respect to the proposed regulations, make the regulations either in the form in which a copy of them was published in pursuance of this subsection or in that form with such modifications as he considers appropriate.

(6) A river purification authority may by byelaws make such provision as the authority considers appropriate for prohibiting or regulating the washing or cleaning, in any controlled waters in its area, of things of a kind specified in the byelaws; and a person who contravenes any byelaws made by virtue of this subsection shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale or such smaller sum as is specified in the byelaws.

(7) A person guilty of an offence by virtue of subsection (1) of this section shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum or both;
(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.

(8) The maximum penalty prescribed in pursuance of subsection (4) of this section shall not exceed the penalties specified in paragraphs (a) and (b) of the preceding subsection.

(9) In subsection (2) of this section—

"disposal licence" has the same meaning as in Part I of this Act;
"local Act" includes enactments in a public general Act which amend a local Act;
"statutory order" means an order, byelaw, scheme or award made under an Act of Parliament, including an order or scheme confirmed by Parliament or brought into operation in accordance with special parliamentary procedure.

Requirements to take precautions against pollution

31A.—(1) The Secretary of State may by regulations make provision—

(a) for prohibiting a person from having custody or control of any poisonous, noxious or polluting matter unless prescribed works and prescribed precautions and other steps have been carried out or take for the purpose of preventing the matter from entering controlled waters;
(b) for requiring a person who already has custody or control of, or makes use of, any such matter to carry out such works for that purpose as may be prescribed.

(2) Without prejudice to the generality of the power conferred by subsection (1) above, regulations under that subsection may—

(a) confer power on the river purification authorities—

(i) to determine for the purposes of the regulations the circumstances in which a person is required to carry out works or take any precautions or other steps; and
(ii) by notice to that person, to impose the requirement and to specify or describe the works, precautions or other steps which that person is required to carry out or take;
(b) provide for appeals to the Secretary of State against notices served by a river purification authority in pursuace of provision made by virtue of paragraph (a) above; and
(c) provide that a contravention of the regulations shall be an offence the penalty for which shall be—

(i) on summary conviction, imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.
(ii) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

Control of discharge of trade and sewage effluent etc. into rivers and coastal waters etc.

32.—(1) Subject to subsections (3) to (5) of this section, a person shall be guilty of an offence if he causes or knowingly permits—

(a) any trade effluent or sewage effluent to be discharged—



(i) into any controlled waters, or
(ii) from land in Scotland through a pipe into the sea out-side the seaward limits of controlled waters, or
(iii) from a building or from plant on to or into any land or into any waters of a loch or pond which are not inland waters;
or
(b) any matter other than trade or sewage effluent to be discharged into controlled waters from a sewer as defined by section 59(1) of the Sewerage (Scotland) Act 1968 or from a drain as so defined; or
(c) any matter other than trade or sewage effluent to be discharged into controlled waters from a drain which a roads authority is obliged or entitled to keep open by virtue of section 31 of the Roads (Scotland) Act 1984, and in respect of which the river purification authority in whose area the discharge occurs has, not later than the beginning of the period of three months ending with the date of the discharge, served on the roads authority a notice stating that this paragraph is to apply to the drain,
unless the discharge is made with the consent in pursuance of section 34 of this Act of the river purification authority in whose area the discharge occurs (or, in a case falling within paragraph (a)(ii) of this subsection, of the river purification authority whose area includes the point at which the pipe passes or first passes into or under controlled waters from the sea outside them) and is in accordance with the conditions, if any, to which the consent is subject.

(2) Where any sewage effluent is discharged as mentioned in paragraph (a) of the preceding sub section from any works or sewer vested in a local authority and the authority did not cause or knowingly permit the discharge but was bound to receive into the works or sewer, either unconditionally or subject to conditions which were observed, matter included in the discharge, the authority shall be deemed for the purposes of that subsection to have caused the discharge.

(3) The Secretary of State may—

(a) by an order made before subsection (1) of, this section comes into force provide that that subsection shall not, while the order is in force, apply to discharges which are of a kind or in an area specified in the order and for which, if this Act had not been passed, consent in pursuance of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965 would not have been required;
(b) by order vary or revoke any order in force by virtue of the preceding paragraph;
and an order made by virtue of this subsection may require any river purification authority specified in the order to publish in a manner so specified such information about the order as is so specified.

(4) Subsection (1) of this section shall not apply to any discharge which—

(a) is from a vessel; or
(b) is authorised by a licence granted under Part II of the Food and Environment Protection Act 1985, and a person shall not be guilty of an offence under subsection (1) if—

(i) the discharge is caused or permitted in an emergency in order to avoid danger to the public;
(ii) he takes all such steps as are reasonably practicable in the circumstances for minimising the extent of the discharge and of its polluting effects; and
(iii) as soon as reasonably practicable after the discharge occurs, particulars of the discharge are furnished to the river purification authority in whose area it occurs.

(5) A local authority shall not be guilty of an offence by virtue of subsection (1) of this section by reason only of the fact that a discharge from a sewer or works vested in the authority contravenes conditions of a consent relating to the discharge if—

(a) the contravention is attributable to a discharge which another person caused or permitted to be made into the sewer or works; and

(b) the authority either was not bound to receive the discharge into the sewer or works or was bound to receive it there subject to conditions but the conditions were not observed; and
(c) the authority could not reasonably have been expected to prevent the discharge into the sewer or works;
and a person shall not be guilty of such an offence in consequence of a discharge which he caused or permitted to be made into a sewer or works vested in local authority if the authority was bound to receive the discharge there either unconditionally or subject to conditions which were observed.

(6) In subsection (2) of I his section and the preceding subsection, "local authority" means a local authority within the meaning of the Sewerage (Scotland) Act 1968.

(7) A person who is guilty of an offence by virtue of subsection (1) of this section shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum or both;
(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.

Control of sanitary appliances in vessels.

33.—(1) A river purification authority may by byelaws make such provision as the authority, considers appropriate for prohibiting or regulating the keeping or use, on any controlled waters in the area of the authority, of vessels of a kind specified in the byelaws which are provided with sanitary appliances; and a person who contravenes any byelaw made by virtue of this section shall be guilty of an offence.

(2) The Secretary of State may by order provide that any byelaws specified in the order which were made by virtue of section 25(1)(c) of the Rivers (Prevention of Pollution) (Scotland) Act 1951 (byelaws) shall have effect, with such modifications (if any) as are so specified, as if made by virtue of the preceding subsection.

(3) In this section "sanitary appliance" means a water closet or other prescribed appliance (except a sink, bath and a shower-bath) which is designed to permit polluting matter to pass into the water on which the vessel in question is for the time being situated.

(4) A person guilty of an offence by virtue of any of the preceding provisions of this section shall be liable on summary conviction to a fine of an amount not exceeding level 4 on the standard scale or such smaller sum as may be specified in the byelaws.

CONSENTS FOR DISCHARGES

Consents for discharges of trade and sewage effluent etc.

34.—(1) An application to a river purification authority for consent in pursuance of this section for discharges of any effluent or other matter shall be accompanied or supplemented by all such information as the authority may reasonably require; and the authority may if it thinks fit treat an application for consent for discharges at two or more places as separate applications for consent for discharges at each of those places.

(2) Subject to the following section, it shall be the duty of a river purification authority to which an application for consent is made in pursuance of this section—

(a) to give the consent either unconditionally or subject to conditions or to refuse it; and
(b) not to withhold the consent unreasonably;
and if within the period of three months beginning with the date when an application for consent is received by the authority, or within such longer period as may at any time be agreed upon in writing between the authority and the applicant, the authority has neither given nor refused the consent nor informed the applicant that the application has been transmitted to the Secretary of State in pursuance of the following section, the authority shall be deemed to have refused the consent.

(3) If it appears to the authority that a person has, without the authority's consent, caused or permitted matter to be discharged in its area in contravention of section 32(1) of this Act and that a similar contravention by that person is likely, the authority may if it thinks fit serve on him an instrument in writing giving its consent, subject to conditions specified in the instrument, for discharges of a kind so specified; but


consent given in pursuance of this subsection shall not relate to any discharge which occurred before the instrument giving the consent was served on the recipient of the instrument.

(4) The conditions subject to which the authority may give its consent in pursuance of this section shall be such reasonable conditions as the authority thinks fit; and without prejudice to the generality of the preceding provisions of this subsection those conditions my include reasonable conditions—

(a) as to the places at which the discharges to which the consent relates may be made and as to the design and construction of any outlets for the discharges;
(b) as to the nature, origin, composition, temperature, volume and rate of the discharges and as to the period during which the discharges may be made;
(c) as to the provision of facilities for taking samples of the matter discharged and in particular as to the provision, maintenance and use of manholes, inspection chambers, observation wells and bore-holes in connection with the discharges;
(d) as to the provision, maintenance and testing of meters for measuring the volume and rate of the discharges and apparatus for determining the nature, composition and temperature of the discharges;
(e) as to the keeping of records of the nature, origin, composition, temperature, volume and rate of the discharges and in particular of records of readings of meters and other recording apparatus provided in accordance with any other condition attached to the consent;
(f) as to the making of returns and the giving of other information to the authority about the nature, origin, composition, temperature, volume and rate of the discharges; and
(g) as to the steps to be taken, in relation to the discharges or by way of subjecting any substance likely to affect the description of matter discharged to treatment or any other process, for minimising the polluting effects of the discharges on any controlled waters;
and it is hereby declared that consent may be given in pursuance of this section subject to different conditions in respect of different periods.

(5) A person who, in an application for consent in pursuance of this section, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular shall be guilty of an offence and liable on summary conviction to a fine not exceeding the statutory maximum or on conviction on indictment to a fine.

Reference to Secretary of State of certain applications for
consent

35.—(1) The Secretary of State may, either in consequence of representations made to him or otherwise, direct a river purification authority to transmit to him for determination applications for consent in pursuance of the preceding section which are specified in the direction or are of a kind so specified, and it shall be the duty of the authority to comply with the direction and to inform each relevant applicant that his application has been transmitted to the Secretary of State.

(2) Before determining an application transmitted to him by a river purification authority in pursuance of this section the Secretary of State may if he thinks fit, and shall if a request to be heard with respect to the application is made to him in accordance with regulations by the applicant or the authority, cause a local inquiry to be held in pursuance of section 96 of this Act into the application or afford to the applicant and the authority an opportunity of appearing before and being heard by a person appointed by the Secretary of State for the purpose.

(3) Where in pursuance of the preceding subsection the Secretary of State affords to an applicant and a river purification authority an opportunity of appearing before and being heard by a person with respect to the application in question, it shall be the duty of the Secretary of State to afford an opportunity of appearing before and being heard by that person to any person who, in pursuance of subsection (1)(c) or (5) of the following section, has made representations relating to the application.

(4) It shall be the duty of the Secretary of State to determine an application transmitted to him by a river purification authority in pursuance of this section by directing the authority to refuse its consent in pursuance of the preceding section in consequence of the application or to give the consent either unconditionally or subject to such conditions as are specified in the direction, and it shall be the duty of the authority to comply with the direction.

Provisions supplementary to ss. 34 and 35

36.—(1) Where a river purification authority receives an application for consent in pursuance of section 34 of this Act or serves an instrument in pursuance of subsection (3) of that section, it shall be the duty of the authority, before deciding whether to give or refuse consent in pursuance of the application or, as the case may be, after serving the instrument—

(a) to publish in the prescribed form notice of the application or instrument in two successive weeks in a newspaper or newspapers circulating in—

(i) the area or areas in which the places are situated at which it is proposed in the application that the discharges should be made or, as the case may be, at which discharges are the subject of consent given by the instrument, and
(ii) the area or areas appearing to the authority to be in the vicinity of any controlled waters which the authority considers likely to be affected by the discharges,
and, not earlier than the day following that on which the first publication of the notice is completed in all relevant areas in pursuance of the preceding provisions of this paragraph, to publish such a notice in the Edinburgh Gazette;
(b) to send copies of the application or instrument to each local authority in whose area it is proposed in application that a discharge should be made or in whose area a discharge is the subject of consent given by the instrument and, in the case of an application or instrument relating to coastal waters, relevant territorial waters or an application relating to waters outside the seaward limits of relevant territorial waters, to the Secretary of State; and
(c) to consider any written representations relating to the application or instrument which are made to the authority by any person within the period of six weeks beginning with the date on which the notice of the application or instrument is published in the Edinburgh Gazette.

(2) For the purposes of subsection (1) above, "local authority" means a regional or district council, and any place at sea at which it is proposed in an application that a discharge should be made shall be treated as situated at the point on land nearest to that place.

(3) Where notice of an application is published by a river purification authority in pursuance of subsection (1)(a) of this section, the authority shall be entitled to recover the cost of publication from the applicant.

(4) A river purification authority shall be entitled to disregard the provisions of subsection (1) of this section in relation to an application (except so much of paragraph (b) of that subsection as requires copies of the application to be sent to the Secretary of State) if the authority proposes to give consent in pursuance of the application and considers that the discharges in question will have no appreciable effect on the water into which they are proposed to be made.

(5) The preceding provisions of this section shall have effect with prescribed modifications in relation to an application which is the subject of a direction in pursuance of subsection (1) of the preceding section.

(6) Where a river purification authority proposes to give consent in pursuance of section 34 of this Act in consequence of an application in respect of which representations have been made in pursuance of subsection (1)(c) of this section then—

(a) it shall be the duty of the authority to serve notice of the proposal on the person who made the representations and to include in the notice a statement of the effect of the following paragraph; and


(b) that person may, within the period of twenty-one days beginning with the day on which the notice of the proposal is served on him, request the Secretary of State in accordance with regulations to give a direction in pursuance of subsection (1) of the preceding section in respect of the application; and
(c) it shall be the duty of the authority not to give consent in consequence of the application before the expiration of that period and, if within that period the said person makes a request in pursuance of the preceding paragraph and serves notice of the request on the authority, not to give consent in pursuance of the application unless the Secretary of State has given notice to the authority that he declines to comply with the request;
and in calculating in the case of any application the period of three months mentioned in section 34(2) of this Act or a longer period there mentioned there shall be disregarded any period during which the authority to which the application was made is prohibited by virtue of paragraph (c) of this subsection from giving consent in consequence of the application.

(7) A consent for any discharges which is given in pursuance of section 34 of this Act is not limited to discharges by a particular person and accordingly extends to the discharges in question which are made by any person.

Revocation of consents and alteration and imposition of
conditions.

37.—(1) It shall be the duty of a river purification authority by which a consent is given in pursuance of section 34 of this Act to review from time to time the consent and the conditions, if any, to which the consent is subject; and subject to the following section the authority may, by a notice served on the person making a discharge in pursuence of the consent, revoke the consent if it is reasonable to do so or make reasonable modifications of the said conditions or, in the case of an unconditional consent, provide that it shall be subject to reasonable conditions specified in the notice.

(2) Subject to the following section, the Secretary of State may—

(a) for the purpose of enabling Her Majesty's Government in the United Kingdom to give effect to any Community obligation or to any international agreement to which the United Kingdom is for the time being a party;
(b) for the protection of public health or of flora and fauna dependent on an aquatic environment; or
(c) in consequence of any representations made to him or otherwise,
direct a river purification authority to serve a notice in pursuance of the preceding subsection containing such provisions as are specified in the direction and it shall be the duty of the authority to comply with the direction; and if the authority fails to serve the notice within such period as the Secretary of State may allow he may serve the notice on behalf of the authority, and it is hereby declared that for the purposes of this Part of the Act a notice served on behalf of an authority by virtue of this subsection is served by the authority.

Restriction on variation and revocation of
consent and of previous variation

38.—(1) Each instrument signifying the consent of a river purification authority in pursuance of section 34 of this Act shall specify a period during which no notice in pursuance of subsection (1) or (2)(c) of the preceding section is to be served in respect of the consent without the written agreement of a person making a discharge in pursuance of the consent; and the said period shall be a reasonable period of not less than two years beginning with the day on which the consent takes effect.

(2) Each notice served by a river purification authority in pursuance of subsection (1) or (2)(c) of the preceding section (except a notice which only revokes a consent or conditions) shall specify a period during which a subsequent notice in pursuance of that subsection which alters the effect of the first-mentioned notice is not to be served without the written agreement of a person making a discharge in pursuance of the consent to which the first-mentioned notice relates; and the

said period shall be a reasonable period of not less than two years beginning with the day on which the first-mentioned notice is served.

(3) The authority shall be liable to pay compensation to any person in respect of any loss or damage sustained by that person as a result of the authority's compliance with a direction given in relation to any consent by virtue of section 37(2)(b) of this Act if—

(a) in complying with that direction the authority does anything which, apart from that direction, it would be precluded from doing by a restriction imposed under subsection (1) or (2) above; and
(b) the direction is not shown to have been in consequence of—

(i) a change of circumstances which could not reasonably have been foreseen at t he beginning of the period to which the restriction relates; or
(ii) consideration by the Secretary of State of material information which was not reasonably available to the authority at the beginning of that period;
and in this paragraph information is material, in relation to a consent, if it relates to any discharge made or to be made by virtue of the consent, to the interaction of any such discharge with any other discharge or to the combined effect of the matter discharged and any other matter.

(4) A restriction imposed under subsection (1) or (2) of this section shall not prevent the service by the authority of a notice by virtue of section 37(1) or (2)(c) of this Act in respect of a consent given under section 34(3) of this Act if—

(a) the notice is served not more than three months after the beginning of the period specified in section 36(1)(c) of this Act for the making of representations with respect to the consent; and
(b) the authority or, as the case may be, the Secretary of State considers, in consequence of any representations received by it or him within that period, that it is appropriate for the notice to be served.

39.—(1) Any questions as to whether—

(a) a river purification authority has unreasonably withheld its consent in pursuance of section 31(3) or 34 of this Act or regulations made by virtue of section 31(4) of this Act or has given its consent in pursuance of the said section 34 or such regulations subject to conditions which are unreasonable; or
(b) a notice served in pursuance of section 37(1) of this Act contains terms (other than a term required by subsection (2) of the preceding section) which are unreasonable; or
(c) the period specified in any instrument or notice in pursuance of subsection (1) or (2) of the preceding section is unreasonable,
shall be determined for the purposes of this Part of this Act by the Secretary of State: but no question relating to a determination of the Secretary of State in pursuance of section 35(4) of this Act shall be referred to him in pursuance of this subsection and any such determination shall be final.

(2) Provision may be made by regulations as to the manner in which and the time within which a question may be referred or a request may be made in pursuance of the preceding provisions of this section and as to the procedure for dealing with such a reference or request.

(3) In any case where—

(a) a question as to whether a river purification authority has unreasonably withheld its consent in pursance of section 34 of this Act, or has given its consent in pursuance of that section subject to conditions which are unreasonable, is referred to the Secretary of State in pursuance of this section; and
(b) representations relating to the application for the consent in question were made to the authority in pursuance of section 36(1)(c) of this Act,
it shall be the duty of the Secretary of State, before he determines the question, to secure that the authority has served notice of the reference on the persons who made the representations and to take account of any further written representations relating to the application which are received by him from those persons within a prescribed period.

(4) Where a question is referred to the Secretary of State in pursuance of subsection (1) of this section and he determines that the consent in question was unreasonably withheld or that the conditions or terms or period in question are or is unreasonable, he shall give to the relevant river purification authority such a direction as he thinks fit with regard to the consent, conditions, terms or period and it shall be the duty of the authority to comply with the direction.

(5) the withholding by a river purification authority of such a consent as it is mentioned in subsection (1) of this section, the conditions subject to which such a consent is given and such terms and period as are so mentioned shall be treated as reasonable for the purposes of this Part of this Act until the contrary is determined in pursuance of subsection (1) of this section except that where a question as to the reasonableness of the conditions of a consent given in pursuance of regulations made by virtue of section 31(4) of this Act is referred to the Secretary of State in pursuance of this section the consent shall be treated for those purposes as unconditional while the reference is pending.

(6) At any stage of the proceedings on a reference to the Secretary of State in pursuance of this section he may, and shall if so directed by the Court of Session, state in the form of a special case for the decision of the court any question of law arising in those proceedings.

Transitional provisions relating to consents

40.—(1) Regulations may provide—

(a) for any consent for discharges which was given in pursuance of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965 to have effect for any of the purposes of this Part of this Act as if given in pursuance of prescribed provisions of section 34 of this Act; and
(b) for any conditions to which such a consent was subject in pursuance of any of those enactments to have effect for any of those purposes as if attached to the consent in pursuance of prescribed provisions of this Part of this Act.

(2) Regulations may provide for the terms of a consent for an outlet which was given in pursuance of the rivers (Prevention of Pollution) (Scotland) Act 1951 and for conditions to which such a consent was subject in pursuance of that Act or which were imposed with respect to the outlet in pursuance of section 28(4) of that Act—

(a) to have effect, with or without modifications, for any of the purposes of this Part of this Act as if the terms or conditions were conditions attached to a consent given in pursuance of section 34 of this Act for discharges from the outlet; or
(b) to be treated, with or without modifications, for any of those purposes in such other manner as may be prescribed.

(3) An application for such a consent as is mentioned in subsection (1) of this section which is pending immediately before the relevant day shall be treated on and after that day as an application for consent in pursuance of section 34 of this Act which was made on the day on which it was actually made.

(4) Where an application for consent in pursuance of section 34 of this Act in respect of any discharge is duly made to a river purification authority before the relevant day and the discharge in question is not such as is mentioned in section 32(3)(a) of this Act and is substantially a continuation of a previous discharge which during the year ending with the 30th April 1974 was lawfully made without such consent as is so mentioned (any reduction of the temperature, volume or rate of the discharge as compared with that of the previous discharge being disregarded), the authority shall be deemed to have given unconditionally the consent applied for—

(a) until the authority actually gives the consent unconditionally; or
(b) if the authority decides to refuse consent or to give it subject to conditions, until the expiration of the period of three months beginning with the date when the authority serves on the applicant notice of the decision; or
(c) if during that period the applicant appeals to the Secretary of State against the decision in pursuance of the preceding section, until the determination of the appeal.

(5) Regulations may provide for any appeal which immediately before the relevant day is pending in pursuance of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965 to be treated on and after that day as an appeal in pursuance of prescribed provisions of this Part of the Act.

(6) In this section "the relevant day" means the day when section 32(1) of this Act comes into force.

Ancillary provisions relating to control of discharges
Registers

41.—(1) It shall be the duty of river purification authorities to maintain in accordance with regulations, registers containing prescribed particulars of—

(a) any notices of water quality objectives or other notices served under section 30C above;
(b) applications for consents—

(i) made to the authorities in pursuance of this part of this Act;
(ii) sent to the Secretary of State in pursuance of section 34 of this Act (as modified by regulations made under section 55 of this Act);
(c) consents given in pursuance of any provision of this Part of this Act (except section 40(4)) and the conditions to which the consents are subject;
(d) samples—

(i) of effluent taken by the authorities in pursuance of section 19 of the Rivers (Prevention of Pollution) (Scotland) Act 1951;
(ii) of effluent taken by islands councils from discharges made by them in their own areas for the purposes of their functions relating to the pollution of controlled waters; and
(iii) of water taken by the authorities;
and information produced by analyses of the samples and the steps taken in consequence of the information;
(e) certificates issued in pursuance of the following section.

(2) It shall be the duty of a river purification authority—

(a) to secure that registers maintained by the authority in pursuance of the preceding subsection are, after such date as is prescribed with respect to the registers, open to inspection by the public free of charge at all reasonable hours; and
(b) to afford members of the public reasonable facilities for obtaining from the authority, on payment of reasonable charges, copies of entries in the register.

Power of Secretary of State to exempt applications, consents
and conditions etc. from publicity.

42.—(1) If a person who proposes to make or has made an application to a river purification authority for any consent in pursuance of section 34 of this Act (hereafter in this subjection refered to as "the relevant application")—

(a) applies to the Secretary of State within a prescribed period for a certificate providing that section 36(1) of this Act and paragraphs (b) to (d) of subsection (1) of the preceding section shall not apply to the relevant application or to any consent given or conditions imposed in consequence of the relevant application or to any sample of effluent taken from a discharge for which consent is given in consequence of the relevant application or to information produced by analysis of such a sample; and
(b) satisfies the Secretary of State that it would—

(i) prejudice to an unreasonable degree some private interest by disclosing information about a trade secret, or
(ii) be contrary to the public interest,
if a certificate were not issued in pursuance of his application to the Secretary of State.
the Secretary of State may issue a certificate to that person providing that section 36(1) of this Act and those paragraphs shall not apply to such of the things mentioned in paragraph (a) of this subsection as are specified in the certificate.

(2) If a person who is making or propose to make a discharge which is the subject of a consent given in pursuance of the Rivers (Prevention of Pollution) (Scotland) Acts 1951 and 1965—



(a) applies to the Secretary of State for a certificate providing section shall not apply to the consent or any conditions to which the consent is subject or any sample of effluent taken from a discharge to which the consent relates or any information produced by analysis of such a sample; and
(b) satisfied the Secretary of State as mentioned in paragraph (c) of the preceding subsection,
the Secretary of State may issue a certificate to that person providing that the said subsection (1)(c) or (d) shall not apply to such of the things mentioned in paragraph (a) of this subsection as are specified in the certificate.".

5. For sections 46 to 51 there shall be substituted the following sections—

"Operations by water authorities to remedy or forestall
pollution of water.

46.—(1) Where it appears to a river purification authority that any poisonous, noxious or polluting matter or any solid waste matter is likely to enter, or is or was present in, any controlled waters in its area, the authority may carry out in its area or elsewhere such operations as it considers appropriate—

(a) in a case where the matter appears likely to enter such waters, for the purpose of preventing it from doing so; and
(b) in a case where the matter appears to be or to have been present in such waters, for the purpose of removing or disposing of the matter or of remedying or mitigating any pollution caused by its presence in the waters or of restoring the waters (including the fauna and flora dependent on the aquatic environment of the waters), so far as it is reasonably practicable to do so, to the state in which they were immediately before the matter became present in the waters;
but nothing in this subsection empowers a river purification authority to impede or prevent the making of any discharge in pursuance of a consent given by any authority by virtue of section 34 of this Act.

(2) Where a river purification authority carries out any operations in pursuance of this section the authority shall, subject to the following subsection, be entitled to recover the costs of doing so from any persons who caused or knowingly permitted the matter in question to be present at the place from which it was likely in the opinion of the authority to enter the controlled waters or, as the case may be, to be present in the controlled waters.

(3) No such costs shall be payable by a person—

(a) in so far as he satisfies the court in which it is sought to recover the costs that the costs were incurred unnecessarily; or
(b) for any operations in respect of water from an abandoned mine which that person permitted to reach such a place as is mentioned in the preceding subsection or to enter the controlled waters.

(4) In determining the damage which a person has suffered in consequence of pollution in respect of which operations have been or may be carried out in pursuance of this section, account shall be taken of the extent to which it is shown that the damage has been reduced by operations in pursuance of this section and of the extent to which it is shown that the damage is likely to be so reduced.

Duty of authorities to deal with waste from vessels etc.

47.—(1) It shall be the duty of each river purification authority—

(a) to arrange for the collection and disposal of waste from vessels in its area which appears to the authority to need collection in consequence of section 33 of this Act; and
(b) to arrange for the provision of facilities for the washing out of prescribed appliances from vessels in its area.

(2) A river purification authority may arrange for the provision of facilities by way of water closets, urinals and wash basins for the use of persons from vessels in the authority's area.

(3) A port local authority constituted under Part X of the Public Health (Scotland) Act 1897 shall have power to make arrangements with a river purification authority for the purposes of any of the preceding provisions of this section.

Power of river purification authorities to exclude unregistered
vessels from rivers etc.

48.—(1) Where it appears to a river purification authority to be appropriate to do so for the purpose of preventing the pollution of inland waters in its area, the authority may make byelaws providing that vessels shall not be on any such waters which are specified in the byelaws unless the vessels are registered by the authority in accordance with the byelaws or are exempted by the byelaws from registration; and a person who causes or knowingly permits a vessel to be on inland waters in contravention of byelaws made by virtue of this subsection shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale or such smaller sum as may be specified in the byelaws.

(2) Byelaws made by a river purification authority in pursuance of the preceding subsection may authorise the authority to make reasonable charges in respect of the registration of vessels in pursuance of the byelaws; and no charges shall be payable, by persons in or from vessels registered by the authority in pursuance of the byelaws, in respect of the use by those persons of facilities provided in pursuance of the preceding section by or by arrangement with the authority.

Deposits and vegetation in rivers etc.

49.—(1) If without the consent of the relevant river purification authority, which shall not be unreasonably withheld,—

(a) a person removes from any part of the bottom, channel or bed of any inland waters a deposit accumulated by reason of any dam, weir or sluice holding back the waters and does so by causing the deposit to be carried away in suspension in the waters; or
(b) any substantial amount of vegetation cut or uprooted in any inland waters, or so near to any such waters that it falls into it, is allowed to remain in the waters by the wilful default of any person,
then, subject to the following subsection, that person shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.

(2) Nothing in paragraph (a) of the preceding subsection applies to anything done in the exercise of statutory powers conferred by or under any enactment relating to land drainage, flood prevention or navigation.

(3) Regulations may provide that any reference to inland waters in subsection (1) of this section shall be construed as including a reference to such coastal waters as are prescribed for the purposes of that subsection.

(4) Any question as to whether the consent of a river purification authority in pursuance of subsection (1) of this section is unreasonably withheld shall be determined by the Secretary of State; and any consent given in pursuance of section 24 of the Rivers (Prevention of Pollution) (Scotland) Act 1951 (which is superseded by this section) shall be treated for the purposes of this section as given in pursuance of this section.

Investigation of water pollution problems arising from closure
of mines

50. Each river purification authority shall have power to carry out studies for the purposes of ascertaining—

(a) what problems relating to the pollution of controlled waters may arise or have arisen in consequence of the abandonment of any mine in its area or might arise if any such mine were abandoned; and
(b) what steps are likely to be appropriate for the purpose of dealing with the problems and what the cost of taking those steps would be.

Codes of good agricultural practice

51.—(1) The Secretary of State may by order made by statutory instrument approve any code of practice issued (whether by him or by another person) for the purpose of—

(a) giving practical guidance to persons engaged in agriculture with respect to activities that may affect controlled waters; and
(b) promoting what appear to him to be desirable practices by such persons for avoiding or minimising the pollution of any such waters,


and may at any time by such an order approve a modification of such a code or withdraw his approval of such a code or modification.

(2) A contravention of a code of practice for the time being approved under this section shall not of itself give rise to any criminal or civil liability, but a river purification authority shall take into account whether there has been or is likely to be any such contravention in determining when and how it should exercise any powers conferred on it by regulations under section 31A of this Act.

(3) The Secretary of State shall not make an order under this section unless he has first consulted the river purification authorities.".

6. For sections 53 to 56 there shall be substituted the following sections—

"Charges in respect of certain discharges

53.—(1) Where—

(a) an application is made to a river purification authority for a consent for the purposes of sections 31(3), 32 or 49 of this Act of for the modification of, or of the conditions of, any such consent;
(b) the authority gives a consent under section 34(3) of this Act or a consent for the purposes of section 31(3) or 49 of this Act; or
(c) a consent for the purposes of sections 31(3), 32 or 49 of this Act is for the time being in force,
the authority may require the payment to it of such charges as may be specified in or determined under a scheme made by it under this section.

(2) The persons who shall be liable to pay charges which are required to be paid by virtue of a scheme under this section shall be—

(a) in the case of a charge by virtue of subsection (1)(a) above, the person who makes the application;
(b) in the case of a charge by virtue of subsection (1)(b) above, any person who is authorised to do anything by virtue of the consent and on whom the instrument giving the consent is served; and
(c) in the case of a charge by virtue of subsection (1)(c) above, any person who makes a discharge in pursuance of the consent at any time during the period to which, in accordance with the scheme, the charge relates;
and provision made by a scheme for the purposes of paragraph (c) above may impose a single charge in respect of the whole period for which the consent is in force or separate charges in respect of different parts of that period or both such a single charge and such separate chages.

(3) An authority shall not make a scheme under this section unless its provisions have been approved by the Secretary of State; and the consent of the Treasury shall be required for the giving of such an approval.

(4) Before submitting a scheme under this section to the Secretary of State for his approval an authority shall, in such manner as it considers appropriate for bringing it to the attention of persons likely to be affected by it, publish a notice setting out its proposals and specifying the period within which representations with respect to the proposals may be made to the Secretary of State.

(5) Where any proposed scheme has been submitted to the Secretary of State for his approval, it shall be the duty of the Secretary of State, in determining whether or not to approve the scheme or to approve it subject to modifications—

(a) to consider any representations duly made to him; and
(b) to have regard to the matters specified in subsection (6) below.

(6) The matters mentioned in subsection (5)(b) above are—

(a) the need to ensure that the amount recovered by the authority by way of charges fixed by or under schemes under this section does not exceed, taking one year with another, such amount as appears to the Secretary of State to be reasonably attributable to the expenses incurred by the authority in carrying out its functions under sections 34 to 38 and 49 of this Act and otherwise in relation to discharges into controlled waters; and
(b) the need to ensure that no undue preference is shown, and that there is no undue discrimination, in the fixing of charges by or under the scheme.

(7) A scheme under this section may—

(a) make provision with respect to the times and methods of payment of the charges which are required to be paid by virtue of the scheme;
(b) make different provision for different cases, including different provision in relation to different persons, circumstances or localities; and
(c) contain supplemental, consequential and transitional provision for the purposes of the scheme;
and such a scheme may revoke or amend a previous scheme under this section.

(8) It shall be the duty of a river purification authority to take such steps as it considers appropriate for bringing the provisions of any scheme under this section which is for the time being in force to the attention of persons likely to be affected by them.

Directions to the river purification authority

54.—(1) Directions of a general or specific character may be given to each river purification authority by the Secretary of State with respect to the carrying out of its functions and it shall be the duty of each river purification authority to comply with any such direction.

(2) Without prejudice to the generality of the power conferred by subsection (1) of this section, directions under that subsection may include such directions as the Secretary of State considers appropriate in order to enable Her Majesty's Government in the United Kingdom to give effect to—

(a) any Community obligations; or
(b) any international agreement to which the United Kingdom is for the time being a party.

(3) Any power of the Secretary of State otherwise than by virtue of this section to give direction to a river purification authority shall be without prejudice to the power conferred by this section.

Supplemental
Discharges by islands councils

55.—(1) This part of this Act shall have effect with prescribed modifications in relation to discharges by an islands council in its area.

(2) Without prejudice to the generality of the powers to make regulation conferred by the preceding subsection, any regulations made in pursuance of that subsection may provide for consents required by islands councils for the purposes of this Part of this Act as modified by virtue of that subsection to be or be deemed to be given by the Secretary of State.

Interpretation etc. of Part II

56.—Except where the context otherwise requires, in this Part of this Act—

"agriculture" and "agricultural" have the same meanings as in the Agriculture (Scotland) Act 1948;
"coastal waters", "controlled waters", "ground waters", "inland waters" and "relevant territorial waters" have the meanings given by section 30A(1) above;
"effluent" means any liquid, including particles of matter and other substances in suspension in the liquid;
"sewage effluent" includes any effluent from the sewage disposal or sewerage works of a local authority within the meaning of the Sewerage (Scotland) Act 1968;
"trade effluent" includes any effluent which is discharged from premises used for carrying on any trade or industry, other than surface water and domestic sewage;
"underground strata" means strata subjacent to the surface of any land;
"water authority" means an authority established in accordance with section 3 of the Water (Scotland) Act 1980;
"watercourse" includes all rivers, streams, ditches, drains, cuts, culverts, dykes, sluices, sewers, and passages through which water flows except mains and other pipes which belong to the water authority or are used by a water authority or any other person for the purposes only of providing a supply of water to any premises.

(2) In this Part of this Act—



(a) any reference to the waters of any loch or pond or of any river or watercourse includes a reference to the bottom, channel or bed of any loch, pond, river or, as the case may be, watercourse which is for the time being dry; and
(b) any reference to water contained in underground strata is a reference to water so contained otherwise than in a sewer, pipe, reservoir, tank or other underground works constructed in any such strata.

(3) For the purposes of the definition of "trade effluent" in subsection (1) above any premises (whether on land or not) wholly or mainly used (whether for profit or not) for agricultural purposes or for the purposes of fish farming or for scientific research or experiment shall be deemed to be premises used for carrying on a trade.

(4) For the purposes of this Part of this Act the area of a river purification authority shall include all controlled waters off the coast of the area which is the authority's area apart from this subsection; and any question as to whether any place is included in the area of a river purification authority by virtue of this subsection shall be determined by the Secretary of State.

(5) For the purposes of this Part of this Act a notice imposing conditions with respect to discharges which was given by a river purification authority in pursuance of—

(a) section 28(4) of the Rivers (Prevention of Pollution) (Scotland) Act 1951; or
(b) section 1(5) of the Rivers (Prevention of Pollution) (Scotland) Act 1965,
shall be treated as having given the authority's consent in pursuance of the Act in question for those discharges subject to those conditions.

(6) Section 30(5) of this Act shall have effect in relation to this Part of this Act as if for any reference to Part I of this Act there were substituted a reference to this Part of this Act.

7. In subsection (1) of section 104 (orders and regulation), for the words "section 33(4), 44(5), 52, 53 or 109(2)" there shall be substituted the words "sections 44(5) and 109(2).". —[Mr. Moynihan.]

Schedule 1

THE NATIONAL RIVERS AUTHORITY

Mr. Moynihan: I beg to move amendment No. 55, in page 186, line 23, after '(1)' insert

'The Authority shall be entitled to borrow in accordance with the following provisions of this paragraph but not otherwise.

(1A) Subject to sub-paragraph (1C) below'.

Mr. Speaker: With this it will be convenient to take Government amendment No. 56.

Mr. Moynihan: The amendments set out the circumstances in which it is proposed that the National Rivers Authority will be able to undertake borrowing in relation to its functions. Amendment No. 55 provides that the amount borrowed by the NRA under its temporary borrowing powers, for which paragraph 18 of the schedule already provides, will be subject to the authority's overall borrowing requirement. Amendment No. 56, which is the more significant of the amendments, would give the NRA the ability to undertake long-term borrowing to finance its flood defence functions in certain defined circumstances. It describes the mechanism by which loans would be made to the NRA for that purpose and sets out borrowing limits which would apply.
During discussion in Committee of the NRA's finances concern was expressed on both sides about the fact that the Bill did not provide for the NRA to have long-term borrowing powers in relation to flood defence work. In particular, concern was expressed in Committee about the

funding arrangements for flood defence emergencies. As my hon. Friend the Member for Daventry (Mr. Boswell) said:
Emergencies may arise which occasion emergency action and it is extremely difficult to budget or save for that in advance."[Official Report, Standing Committee D, 17 January 1989; c. 258.]
We have given careful consideration to the arguments that were put in Committee by my hon. Friends and, indeed, to representations received from those concerned with flood defence arrangements and to the views of the Opposition. While we remain firmly of the view, for reasons that I explained at length in Committee, that it is not necessary for the NRA to have long-term borrowing powers to deal with the normal run of flood defence work, we accept the argument that there are some circumstances in which it would be right for the NRA to have such powers.
Accordingly, amendment No. 56 provides the NRA with borrowing powers for use when it is faced with heavy expenditure for which it had been impossible to plan. We therefore do not expect that they will need to be used very often. Long-term borrowing under these powers would require the consent, as appropriate, of my right hon. Friend the Minister of Agriculture, Fisheries and Food or my right hon. Friend the Secretary of State for Wales, together with the approval of the Treasury. We intend that the use of these powers shall be limited to circumstances in which works are urgently needed to avoid the risk of serious flooding, and the flood defence committee cannot defer other planned work to provide the necessary finance.

Mr. Pike: This is an important amendment and, as the Minister said, the subject evoked much concern in Committee. Can he tell us how the £160 million limit was arrived at and what would happen if at some subsequent date the figure proved insufficient? Could it then be changed?

Mr. Moynihan: It is a figure which, after detailed consideration with the water authorities, we felt was a wise, indeed generous, one to cover such unexpected expenditure. There is no doubt that in the event of an appalling tragedy that required substantial expenditure we would need to come to the House anyway. The hon. Gentleman will recall that that matter was argued in Committee. If I recall rightly, one of the examples aired was of an extensive flood in East Anglia and the possibility of substantial expenditure being required. Clearly, that would require parliamentary approval either under the usual procedure or under an emergency procedure.
We think that after lengthy discussions the figures arrived at in the proposal are generous. I am sure that hon. Members recognise that long-term borrowing powers should more than adequately cover the points made by hon. Members when, often vociferously but mainly in a quiet and gentle manner, they expressed their concern about the arrangements for funding flood emergencies. I am confident that the amendments fully meet that concern, and that, with the addition of these powers, the National Rivers Authority will have the full range of powers that it needs to respond to any future flooding emergencies. They will ensure that flood defence committees will be able to carry out their vital work as effectively as they have carried it out in the past. They also provide a clear demonstration that we are determined to give the NRA all the powers that it needs to operate effectively.

Mr. Allan Roberts: The Minister was right to say that the amendments are important. The Government recognised the strength of the case made by Opposition and Conservative Members in Committee when we debated the National Rivers Authority. The main amendment, No. 56, would allow the National Rivers Authority to borrow other than by way of a temporary loan from the Secretary of State or from the Minister of Agriculture, Fisheries and Food money for capital purposes in connection with flood defence. The amendments set up a system for such spending to be subject to review by the Comptroller and Auditor General and for reports and accounts to be laid before Parliament. We do not object to any of those things, but there are certain items missing from the amendments and the Opposition think that such items should have been included to take the amendments further and to provide for a much more comprehensive system of borrowing powers and freedom to borrow for the National Rivers Authority.
The borrowing is related only to the carrying out of flood defence functions and not to the environmental works that will be the responsibility of the National Rivers Authority and with which I shall shortly deal. As my hon. Friend the Member for Burnley (Mr. Pike) has said, sub-paragraph (1C) of amendment No. 56 limits the amount outstanding on the aggregate of loans to the NRA to
£100 million or such greater sum, not exceeding £160 million, as the relevant Ministers may specify by order
which is subject to affirmative resolution. It would be helpful to know the basis for these broad figures. The Minister touched on that, but I do not think that his answer to my hon. Friend the Member for Burnley was wholly satisfactory. Will the Government guarantee that all flood defence work likely to be considered desirable by the National Rivers Authority will fall within these limits? What provision will be made for updating the figures against inflation?
The fixing of a ceiling in primary legislation effectively constrains the developments in the capital programme of the National Rivers Authority even in the face of unforeseen requirements. Throughout the progress of the Bill when it was a matter of conforming to EC and environmental standards and of imposing controls that benefit the consumer, the Government left everything subject to the Secretary of State for the Environment who can determine the levels, the figures, the dates, the times and the expenditure as he sees fit. However, when it is a matter of setting expenditure and borrowing levels in the public sector the actual figures have been put down in the Bill by way of amendment and it will be difficult to get them changed. We should like to hear more about that.
The Government's proposals are inadequate in the light of the functions of the National Rivers Authority. We are concerned about how the authority will function and how it will be able to carry out the jobs now done by the water authorities that are being handed over to the NRA. Lord Crickhowell, who will be the chairman of the National Rivers Authority, said:
Before I leave the subject of charges, I think I should make it absolutely clear that I see it as one of the priority objectives of the new National Rivers Authority to operate a slim, efficient, cost-conscious organisation. The National Rivers Authority will start with a problem. They will inherit existing structures, obligations and commitments to staff. These commitments must be honoured but clearly, as soon as

it is in being, it will need to undertake a thorough review of what resources it needs to retain inhouse and what services it might over an appropriate time scale buy in from outside contractors.
We are concerned that if the National Rivers Authority is prevented from borrowing the money that it needs to do all the jobs and tasks that it is being given, and not just flood protection and defences, there will be much outside contracting. There will be an inadequate, slimmed-down authority, that has not got the resources, and will not have the borrowing power, to get on with the job that the majority of hon. Members want it to do.
The functions of the National Rivers Authority include water resource planning, licensing of abstraction and the monitoring of licences; there are no borrowing powers for those. Then there is environmental quality and pollution control. Perhaps the Government do not want the NRA to do effective work on environmental quality and pollution control lest it might deter people from buying into the private companies at the time of flotation. There are no borrowing for those functions. Nor are there borrowing powers for the maintenance, improvement and development of fisheries in inland waters, for conservation and recreation, or for the navigation responsibilities of three water authorities. Nor are there borrowing powers for some of the functions of Her Majesty's inspectorate of pollution that are being passed to the National Rivers Authority, or for research.
I have left to the end the question of sea defences. Sea defences and flood defences are similar. Why should sea defences be excluded and flood defences included? That is difficult to understand, especially as the funding for both is similar at the moment, in that the water authorities precept on the local authorities in the areas concerned, and the money eventually comes from rates. Perhaps the Government do not want to give borrowing powers for all the environmental activities that the National Rivers Authority will have to deal with, because they do not want rigorous enforcement imposed on a privatised industry. Perhaps the exclusion of sea defences was an oversight by the Government and they should have been included in the amendments.
The National Rivers Authority will be the only national body engaged in environmental control and monitoring water pollution, yet it is to be given only limited borrowing powers for just one of its functions. Of course, borrowing powers are not much good if the Department of the Environment via the Treasury, or the Treasury via the Department of the Environment, prevents the borrowing because the National Rivers Authority is in the public sector and the borrowing cannot go ahead because of public sector borrowing requirement restrictions, something that the Government have claimed they are getting away from by privatising the water industry. The only justification of substance that they have found for their privatisation proposal is that the privatised water industry will be free from PSBR restrictions. Of course, the water industry could be free from such restrictions without being privatised, and merely by a political decision of the Government.
The National Rivers Authority will remain in the public sector. All the environmentally essential functions of the authority will remain in the public sector and are not being freed from PSBR restrictions. The NRA is being emaciated at birth and strangled by lack of power before it even gets going. With the amendments, the Government


have taken a small, tentative step in the right direction. They should move amendments in the other place, if there is not time now, to include borrowing powers for all the functions of the National Rivers Authority. They should give an undertaking that they will release the authority from PSBR restrictions. That can be done in the public sector. British Nuclear Fuels is in the public sector and it does not suffer PSBR restrictions. That precedent could be followed for the water industry, as it will be when we have a Labour Government and we take it back into social ownership.
4.45 pm
We want to know how the borrowing is to be funded. When an organisation borrows it has to pay interest. Is borrowing to be funded by a precept on the local authorities in whose areas the flood defences are situated, or is it to be funded from general taxation? It is ironic that a Conservative Member mentioned comparative competition even in relation to pension schemes. One thing is certain, as is shown by the amendments on borrowing: the legislation will not introduce competition into the supply of water or the treatment and disposal of sewage. Comparative competition is a joke. There will be no competition.
It is amazing. We have in power a Government who are trying to introduce competition into the sale of beer and at the same time private monopolies into the sale of water. The Government will stand condemned because of the inadequacy of the legislation to protect the environment and their inadequate proposals for the National Rivers Authority which they have heralded as a great environmental step forward.

Mr. Malcolm Moss: I represent a constituency which must be the most drainage-sensitive area in the United Kingdom, so my constituents are extremely pleased with the Government amendment. I want to take up a point made by the hon. Member for Bootle (Mr. Roberts) about flood defence functions. It is my understanding that, under the Land Drainage Act 1976 sea defences and flood protection of sea defences are in the same category as flood protection and land drainage in internal land areas.
Before the amendment was tabled, there was great concern in the Fens of East Anglia that necessary works might be put back or even deferred indefinitely because of the problems associated with raising finance to do necessary work. The problems arise fundamentally from the need to raise capital to meet emergencies and to do the necessary long-term work. There is an example at the moment at the development stage of Anglian Water for the constituency of Cambridgeshire, Nort-East—the middle and south level barrier banks and Ouse washes scheme. That work is being undertaken by the Great Ouse local land drainage committee. The scheme will cost about £20 million. The main elements will be constructed over a four year period, with expenditure of about £5 million per annum. That compares with the normal expenditure of the committee of an average of £3 million each year, so a colossal increase in expenditure is required.
The Ouse washes scheme is a repair of the magnificent drainage channels constructed by the Dutchman Vermuyden, in the 17th century. They have lasted well from that date, but they are in need of repair. Some seepage is taking place into surrounding farmland which

hon. Members will be interested to know is 10 to 12 ft below the water level in the channels. Therefore, it is vital that the necessary remedial work is done on the banks.
If the Government had not come forward with the amendment, there would have been serious implications for the local community in raising the necessary finance. Normally such capital projects are financed by a precept on the county council rate. Under normal circumstances, without the amendment, the increase would have been 34·7 per cent. from 1 April this year. Without the borrowing powers, a further 40 per cent. increase would have been necessary during the period of construction. The effect of the precepts on the internal drainage boards is even more dramatic, because the impact falls on the boards which benefit from the schemes instead of being spread over a much larger area. Increases of up to 90 per cent. would have applied from 1 April this year and further increases of up to 80 per cent. during the period of a scheme's expenditure.
It is obvious that my constituents who pay county council rates and those in the vicinity of the Ouse-Wash banks who pay the necessary drainage rates to their local internal drainage boards are delighted with the Government's amendment. They believe that the amount specified in the amendment of up to £160 million will more than cover the needs of Cambridgeshire and the Fens to the end of this century and beyond. That money also includes provision for considerable flood protection work necessary on the east coast, particularly at Aldeburgh and further north in Norfolk.
The Government have listened carefully to representations from the farming community, from landowners and from my constituents. I know that representations have also been made by many of my hon. Friends and I am grateful to the Government for listening carefully to there and for producing the necessary amendment.

Mr. Dafydd Wigley: I am pleased to welcome the amendment. As hon. Members have said, there was pressure in Standing Committee about this point. I was involved in those debates in Standing Committee because of the implications of this part of the Bill for my constituency, which suffers in many ways from problems of flooding.
The hon. Member for Bootle (Mr. Roberts) raised a point which the Minister must clarify. I had assumed that the amendment would cover the effects from the sea. The Minister would help us if he could confirm that when he replies. If the amendment covers flooding from rivers but not from the sea, there will be a ridiculous situation in some estuarial waters where water enters the area during storms from the sea and the river. In that situation there would have to be a demarcation between which water has caused what damage. There would also be questions about the necessary investment to repair that damage. The Glaslyn estuary near Porthmadog in my constituency has a cob which acts as the sea defence works. However, much of the flooding in that area is caused by water from Snowdonia moving down the river. The Minister may be aware of that example and he must consider it when he replies.
The amendment is welcome as far as it goes. It is unnecessary to build into the Bill the requirement for an amendment to primary legislation if in due course there needs to be a figure over and above £160 million. I cannot see the need for that.
An order before the House would be sufficient to raise the figure to the required level. If an order is to be brought before the House, the Government must introduce it and it must have the support of both Chambers. That must surely be sufficient sanction without the need to build in an amendment to primary legislation. I do not see the need for such rigidity in the Bill.

Mr. Pike: The hon. Gentleman is making a valid point. When we consider the approvals which must be secured from Ministers and Treasury, it is nonsense for the limit of £160 million to be included in the Bill, when Ministers must be convinced that that limit must be achieved. We must be able to achieve this more easily.

Mr. Wigley: Exactly. Perhaps the Government will consider whether this part of the Bill can be further amended in another place.
When the Minister responds, will he clarify the Department's responsibilities in Wales even when, at this late stage, the Bill is dripping its way to another place for further consideration?
Schedule 1 refers to
the Secretary of State and the Minister".
In Wales the Secretary of State and the Minister are the same person. Will the Minister confirm that the Secretary of State for Wales will have responsibility for the whole of Wales, or does he have responsibility only for that part of Wales covered by the regional division of the NRA which is located in Wales? It would be helpful for the people outside this place who must work with this legislation if that point can be clarified. It is not entirely clear now.

Mr. Boswell: My hon. Friend the Minister has already referred to the modest part that I played in Standing Committee on this subject. Those hon. Members who served on the Committee will be aware that I made two speeches about this topic. I introduced an amendment and replied to it at some length. Having expressed my feelings rather strongly in Committee, it would be churlish of me if I did not immediately thank the Government for meeting my substantial concerns which reflected the concerns of many people who have the interests of land drainage at heart by introducing this amendment today.
Although it is inevitable that the Opposition must oppose, they were less than gracious in their welcome for the amendment and in the way in which they sought to use the amendment as a lever to move to further sunlit uplands of unlimited and extravagant Government expenditure.
We remember the economic doctrines espoused by the hon. Member for Bootle (Mr. Roberts) who must not be confused with the distinguished economist, Mr. Roger Bootle. The doctrine espoused by the hon. Member for Bootle was one of limitless Government expenditure, unbridled borrowing and the inevitable consequences. I can understand why the Government have seen fit to impose certain restrictions on the NRA's borrowing powers, even within the concessions that they have announced today.
Those of us with any experience of working in a Government Department and dealing with the Treasury must fully understand the difficulties of making a case for public spending and the absolutely essential role of the

Treasury as the thin red line to curtail spending. I believe that the Government have probably got the balance about right in this amendment.
The Opposition expressed particular concern about the sum involved. It is significant that a sum of up to £160 million is not far away from one year's expenditure on land drainage by the existing water authorities. That is a generous and appropriate allocation.
The Opposition also question whether the amendment's scope should be extended beyond the emergency requirements of land drainage. At this stage I believe that that is not necessary. The hon. Member for Bootle did not make the point clearly enough that the bulk of NRA funding will come from grant aid which will be considered by the Treasury and debated in the estimates in this House. That is the proper way to run Government expenditure. I will not complain if the Government have not given us the whole loaf, when they have given us nine tenths of it.
I hope that the Government will pause and consider whether it would be better, as the hon. Member for Caernarfon (Mr. Wigley) suggested, to introduce an order-making power for flexibility. The last thing that Ministers want is to introduce primary legislation.
If the limit of £160 million needed to be breached for good reason, the last thing that they would want is a separate Bill. They would have to wait to tack the measure on to another Bill and there would be an unnecessary delay. The Government's readiness to listen to our arguments in Committee and their readiness to resist any mechanism which might add to delay, has caused them to introduce this amendment today. Let us have the right figure and the right mechanism to increase that figure if that is necessary in future.

5 pm

Mr. Livsey: One of the things one must welcome is that this amendment involves flood defences but, of course, flood defences only. One can just about remember crises as far back as 1953, when there was immense flooding on the east coast. The £168 million ceiling may be adequate in some senses, particularly perhaps in Cambridgeshire, but may not be adequate to cover the whole of England and Wales. That problem may need to be addressed in future. Will the Minister tell us whether this figure will be indexed over the years, or, indeed, as the hon. Member for Daventry (Mr. Boswell) just mentioned, whether there is at least a possibility of bringing in an order to update such a figure for future expenditure? The fact remains that this involves cash limits by the Treasury on the NRA.
A lot has been said by the Government during the course of the Bill about the gamekeeper-poacher aspect of the Bill. Effectively, this places restrictions on the gamekeeper, and we do not want a toothless environmental protection agency.
I believe that more flexibility beyond flood defences in the financing of the NRA is needed. Sea defences have already been mentioned, and I am sure the Minister will be clarifying that in his wind-up on these amendments.
There are extremely important aspects of funding, such as pollution; the environment; fisheries; and indeed, on the River Wyre, which runs through my constituency, navigation. The press release from the Department of the Environment of 15 March on the provisions made in this amendment indicated restrictions on borrowing powers for unplanned expenditure; at least, one could deduce that.


Really, loan finance is required for all capital expenditure on a planned basis, and I hope that amendments to this effect will be tabled in the other place to enable adequate funding of the NRA. I would like to test the Minister's attitude to capital as far as aspects other than flood defences are concerned, and see whether there is any flexibility in the Government's attitude towards this type of expenditure.

Mr. Moynihan: On the question of guarantees, the long-term borrowing under this amendment is of course for Government, so there is no question of the Government needing to guarantee it. On the subject of borrowing powers applying to sea defences, the arguments of the hon. Member (Mr. Livsey) were compelling. They are, of course, accurate; it would lead to a number of absurdities if distinction were drawn between sea defences and the problems of flooding from rivers. Sea defences are included.

Mr. Allan Roberts: It is not clear from the amendment. Will the Minister make sure that it is clear and that it does cover sea defences? If not, will he amend the amendment in the other place?

Mr. Moynihan: If further clarification of the words I have just spoken from this Dispatch Box is needed, of course we will seek to clarify that in the legislation. If that satisfies the hon. Member, I will move on to the next issue. I confirm that that is definitely the case, but we will look carefully to see whether any further action is required and, if necessary, bring forward proposals in another place.
As far as the overall funding is concerned, we have said repeatedly that the NRA will be fully funded by Exchequer grant in aid, covering all important areas of work which hon. Members on both sides of the House have mentioned this evening. Of course, they will also be funded by capital grants for flood defence and land drainage projects, as outlined in the financial memorandum at the front of the Bill. These sources of income will be complemented by the borrowing powers this amendment introduces. As I have said, we believe the limit on borrowing will be adequate for the time being. However, if at any time it needs to be raised, we will have to come back to the House.
I appreciate the points mentioned by hon. Members on the possibility of a simpler method to enable swift action. We do not anticipate that that will he necessary, but I will respond to hon. Members if I may have time to consider it. I hope that the House will forgive me for not being in a position to give a more comprehensive answer to that specific point this evening, but I give an assurance that, if we feel action is necessary, we will reflect and come back to the House, or possibly to the other place.

Mr. Allen McKay: Is the Minister saying that, on the advent of the NRA, if it finds that the restrictions interfere with its capital planning programme, it could come back to the Department and the Minister will come back to the House to consider raising the ceiling?

Mr. Moynihan: That is right. We are very satisfied that £100 million is a generous limit to NRA borrowing. It can be increased over £160 million by order. We cannot conceive that it will need to be increased to that level, but the point the hon. Member makes is valid. At the moment, the limit could be increased over £160 million only by primary legislation.
I hope I have responded satisfactorily to hon. Members on both sides in saying that if, on reflection, we believe that that is not satisfactory and there could be a simpler way of doing so, we will see if it is workable. Given the very high limits we have looked at, after detailed discussion with the water authorities, we believe that it is accurate.
An important point was made by the hon. Member for Caernarfon (Mr. Wigley) about the Secretary of State's responsibility in Wales, a point to which I am delighted to try to respond, although I am not sure it will meet with his total approval. Suffice to say that for the moment the Secretary of State for Wales will be responsible for authorising loans applied for by the regional flood defence committee based in the area of Welsh Water. That will be the parameters within which he will work. He will not be authorising loans applied for elsewhere in Wales.
I am only sorry that I have not had the opportunity, when reflecting on the important points that the hon. Gentleman made, of actually seeing the Glaslyn estuary myself. I have always enjoyed the privilege and pleasure of going to see Wales, not least because the Wye valley is an important area for me, as I was educated in Monmouth. I am more than confident that the NRA is not only sufficiently financed but, with these powers, will be in a strong enough financial position to carry out the work he envisages.

Mr. Wigley: The point going through my mind was that work in the past has involved local authorities, but local authorities come entirely under the Secretary of State for Wales. The Minister is now saying that the responsibility of the Secretary of State is only in part of Wales, those parts of Wales which come under him for local government purposes, and that those parts which for water purposes come under the Secretary of State for the Environment will in fact come entirely under the Secretary of State for Environment as far as loan permission is concerned. At least we are clear, even if we do not agree.

Mr. Moynihan: I said in my initial response just now that I was not sure whether the hon. Member would be completely satisfied by my words, but the words I have placed on the record are accurate for the position at present.
I hope that that has adequately responded to the various points.

Amendment agreed to.

Amendment made: No. 56, in page 186, line 28, leave out sub-paragraph (2) and insert—

'(1B) Subject to sub-paragraph (1C) below, the authority may borrow, otherwise than by way of temporary loan, such sums in sterling from the Secretary of State or the Minister, as it may require for capital purposes in connection with the carrying out of its flood defence functions.

(1C) The aggregate amount outstanding in respect of the principal of sums borrowed under this paragraph by the Authority shall not at any time exceed £100 million or such greater sum, not exceeding £160 million, as the relevant Ministers may specify by order made by statutory instrument.

(1D) No order shall be made under sub-paragraph (1C) above unless a draft of the order has been laid before the House of Commons and has been approved by a resolution of that House.

(1E) In this paragraph "flood defence functions" has the same meaning as in paragraph 16 above.

Loans to the Authority

18A.—(1) The Secretary of State and the Minister shall each have power, with the approval of the Treasury, to lend any sums to the Authority which the Authority has power to borrow under paragraph 18(1B) above.

(2) Any loan made by the Secretary of State or the Minister under this paragraph shall be repaid to him at such times and by such methods, and interest on the loan shall be paid to him at such rates and at such times as the Secretary of State or, as the case may be, the Minister may with the approval of the Treasury from time to time determine.

(3) Any sums required by the Secretary of State or the Minister for making a loan under this paragraph shall be paid out of money provided by Parliament; and any sums received by the Secretary of State or the Minister in pursuance of sub-paragraph (2) above shall be paid into the Consolidated Fund.

(4) The Secretary of State and the Minister shall each—

(a) prepare in respect of each financial year an account of the sums lent by him to the Authority under this paragraph; and
(b) before the end of September in the following financial year send that account to the Comptroller and Auditor General;
and the form of the account and the manner of preparing it shall be such as the Treasury may direct.

(5) The Comptroller and Auditor General shall examine, certify and report on each account sent to him under this paragraph and shall lay copies of it and of his report before each House of Parliament.'.—[Mr. Moynihan.]

Schedule 2

SCHEMES PROVIDING FOR THE INITIAL TRANSFERS

Mr. Pike: I beg to move amendment No. 133, in page 190, line 2, leave out 'may' and insert 'shall'.
This is an important amendment which deals with a different aspect of pensions from that in the first group of amendments, which we welcome because they clarify the position and constitute a change from the proposals on Second Reading and in Committee. However, our amendment deals with an area about which we are not fully satisfied, and unless the Minister is prepared to move further we intend to have a Division on it.
Earlier the Minister made one or two helpful comments. He described the role of the trustees and said that two trustees would be representatives of members and would be part of the trust's governing body. He said that in some situations all trustees would need to agree before certain action was taken. Those were important and welcome announcements.
However, we are still not 100 per cent. convinced that once the water industry is privatised its employees will have the mirror image scheme with conditions as good as those to which they are currently entitled. We recognise that the Bill takes care of existing pensioners and safeguards pension rights earned to date. We welcome the progress that has been made in removing any ambiguity or doubt. However, we want to ensure that those working in the industry and those who may come into it will have a pension scheme that is at least as good as the existing one.
The Minister has said that he is worried about the number of schemes and whether they can be set up and administered in a proper way. Having served in different capacities on two pension funds before entering the House I recognise that this is a complex subject. I was an employee representative on the Philips staff pension fund, a very large fund, and an employer representative on the Lancashire county council superannuation fund.
The amendment may not be the best way to achieve what we are seeking, but I am sure that the Minister understands the spirit of it and I hope that he will at least

say that if we do not divide the House the Government will move a little further and ensure that one pension fund is established to cover all employees within the privatised water industry, which will guarantee our objectives. If the Minister promises to bring forward an amendment in the other place, that may be acceptable.
Our amendment is simple. It changes the word "may" to "shall". However, as we all know, that is an important change. "May" is permissive and means that something may happen. Given the spirit in which the Government have responded today, I accept that that is what they intend, but that does not mean that it will happen. However, if our amendment were agreed to, the position would be clear because it removes all ambiguity. The Minister says that he does not believe that such a statutory requirement should be included in the Bill, while saying that that is the direction in which the Government wish to go. I find it difficult to understand why the Minister should say that, but is not prepared to put it in the Bill. It is a small area of difference.
On pensions, the difference between us is small and the Government should take the further step that the Opposition, employees in the industry and the trade unions representing them are seeking. It would not be a great step for them to accept the amendment, but it is an important one, and I hope that the Minister will respond positively.
5.15 pm
As there is now only a small difference between us on the pensions issue, it would be silly for the Government not to concede this final point. The Government have so many problems with other aspects of the Bill—we shall be debating those on Third Reading—that they should welcome the opportunity to eliminate one problem now. They say that they want the mirror image scheme, so why not put it in the Bill and remove this little problem?
The Opposition are rightly worried about protecting conditions of employment on privatisation. In the years to come pensions will be a matter of growing concern to many people. Twenty or thirty years ago many people did not regard company pensions as of great importance, but over the years there has been a considerable change of attitude. Pensions now are rightly viewed as an important part of any employment package.
I have served on the Standing Committees on many other privatisation Bills. Despite ministerial undertakings, pension issues have not been resolved to the satisfaction of employees. I well remember debates on the royal ordnance factories and the arguments about TUPE '81. Protection can be given up to the date of vesting and privatisation, but whatever the Minister says, if it is not in the Bill it is not worth the paper it is printed on. Decisions are not based on what is written in Hansard. If a matter goes to court, it is what is in the Bill that counts. The Minister knows that that is the important difference. He knows that if he wants to see a mirror image scheme he should go a little further and include the word "shall" in the Bill.
The Minister also knows that if some small pension schemes could not do exactly what the amendment seeks, he could easily say that the Government are prepared to come forward with a better proposal which will deal with the Opposition's points and give the necessary guarantees to the employees.
All that we are seeking in moving this simple but important amendment is to guarantee that employees


presently in the industry will have their future pension earnings protected, whether they be my daughters or the sons or daughters of other hon. Members. They should have the safeguard of a pension scheme that is at least as good as the existing scheme.
If that is what the Minister wants to see, let him accept the amendment or say that the Government will introduce an amendments in another place to give that guarantee. We believe that those working in the industry now and those who enter it in the years ahead are entitled to such protection.
Whatever the Minister may say or mean today will mean nothing if it is not guaranteed by the Bill which, when it becomes an Act, will be binding. I hope that the Minister will say, even at this late stage, that he is prepared to think again and accept the wisdom of moving in the direction that amendment No. 133 suggests.

Mr. Allen McKay: While Ministers may give assurances in good faith, there is always the possibility that their successors will go against those assurances. That has happened time and again. Consequently, we always seek, particularly in respect of pension matters, a provision in the Bill that backs a Minister's assurances and provides a positive commitment so that people who have worked in an industry for many years, as well as those who enter it in future, may be sure of an adequate pension.
I hope that the Minister will look favourably on amendment No. 133. It is not that we disbelieve the Minister or question his intentions, but within a very short time, Ministers change, and successors may view the pension aspect very differently. It is important to workers in the industry to have an assurance that their pension fund is in order and that their pensions are adequately protected. It has been said that workers could withdraw their money and transfer it to a private pension scheme. Unfortunately, private schemes depend on the performance of investments, with the result that the value of their pensions can reduce. Local government and water authority pension schemes do not reduce in value and are index-linked, whereas private schemes are not. By putting his assurances into the legislation, the Minister can ensure that pensions will retain the value that they have today, which is important to those concerned about their financial future.
I hope that the Minister will give favourable consideration to the amendment, or to .any similar amendment that is presented in another place. If his assurances are written into the Bill, no one will be able to go against them later—which is something that no right hon. or hon. Member in any part of the House would wish to see happen.

Mr. Moynihan: The thrust of the speech of the hon. Member for Burnley (Mr. Pike) concerned pensions, but schedule 2 has nothing to do with pensions. It deals with transfer schemes.
The amendment requires that any transfer scheme made under schedule 2 must provide for all the detailed supplemental provisions set out in schedule 2(3)(2). The word "may" has been used to provide a very necessary element of flexibility in the supplemental arrangements. The drawing up of schemes of transfer will be a complex undertaking, and it would be ridiculous to require the

schemes to provide for all the supplemental provisions set out in schedule 2(3)(2) irrespective of the particular circumstances.
One of the supplemental provisions, set out in paragraph (3)(2)(e), enables a transfer scheme to provide for continuity of employment. I expected that the debate would concentrate on that point. In Committee, my hon. and learned Friend the Minister for Water and Planning gave clear assurances about the rights of staff which I am happy to repeat. The contracts of existing water authority staff will be transferred either to the water services plcs or to the National Rivers Authority. The Secretary of State will not approve schemes of transfer made under schedule 2 unless they provide for continuity of employment. Having repeated that assurance, and taking into account the advantage that the Bill's existing wording provides in terms of necessary flexibility, I ask the House to reject the amendment.
On the specific points made by the hon. Member For Burnley, I repeat that the whole point of the mirror image schemes is to make certain that our objective of ensuring that no pensioner is disadvantaged by the act of transferring liability from a water authority to its successor company is achieved and that responsibility for payment is clear both to the recipient and to the body that will be responsible for it. An enormous number of factors will be taken into account in the deeds, including the responsibilities to be transferred to the NRA, gratuity awards, injury allowance, retirement compensation, pension enhancements, and pensions payable to former water authority chairmen and board members through determinations made by the Secretary of State. The question of what is to be in those deeds will be overwritten by our absolute determination that not one pensioner will be disadvantaged. I hope that that clarifies the position. It will probably not deter the hon. Member for Burnley from dividing the House, but I hope that the points I have made will dissuade him from doing so.

Ms. Walley: The Minister referred to the many general aspects to which the schedule refers, but we choose to concentrate on pensions because of our belief that pensions and the long-term interests of water authority employees are of paramount importance. We particularly want to focus attention on protecting employees' long-term interests and pension rights.
We are right to be concerned about the aspects raised by my hon. Friend the Member for Burnley (Mr. Pike). Some of the employees about whom we are speaking, when they retire, will have given a lifetime of public service to the water industry, and on reaching the end of their careers they are entitled to the same rights as those that they expected at the beginning of their careers. Some of the Government's proposals relate only to employees' short-term interests and do not properly safeguard pension rights.
The only way of ensuring that workers retain their existing pension rights is by incorporating adequate protection in the Bill. If that cannot be done this. afternoon, I hope that the Minister will agree—as he has in respect of the costs of funding land drainage—to return at a later stage with a safeguard of the kind that the amendment seeks.
Just to concentrate on pensions, it is important to understand the present situation. I should like to clarify that, because most people in the water industry are


currently in the water authorities superannuation fund, which is exactly the same as the local authorities superannuation scheme. I do not want to suggest that absolutely everything about it was marvellous—I was lobbied only recently about the way in which women are discriminated against in one small part of the scheme when it comes to widowers' rights—but the point is that the benefits of the scheme are statutory, as is the scheme itself. There is also automatic index-linking of the pensions.
Earlier in the debate the Minister touched on what he referred to as peripheral matters relating to pensions which, in a way, pre-empted the debate that we are having now; but it is equally important that we concentrate on the basic aspects of pensions and index-linking which we would like to see.
5.30 pm
Last year, the water authorities wanted to set up their own pension schemes, linked to privatisation but technically separate. This particular scheme could have advantages in so far as it would not necessarily discriminate against women, but it is a trust-based scheme governed by trustees, so is not statutory. I was very interested in the comments that the Minister made earlier when he talked about mirror image schemes not having any place as a concept when it came to privatisation.
We do not accept that the trust schemes themselves can give exactly the kind of statutory backing that is required now and in the future. That is why we want this amendment changed. We are concerned that index-linking is not guaranteed. The Government now say that the people who go to the National Rivers Authority will be able to maintain their membership of the water authorities superannuation fund but that those who stay with the private companies must choose either to maintain the current accrued benefits, that is, frozen benefits, or transfer to the water authorities scheme, or that each water authority will set up a mirror image of the water authorities superannuation fund.
It is this latter mirror image scheme which concerns us. Any future improvements will not be guaranteed in this scheme and there is constant pressure to remove the elements of the water authorities superannuation fund which discriminate against women, which are likely to change in the not-too-distant future. In addition, the mirror image will be not statutory but trust-based. We ask why it cannot be enshrined in law. We are very concerned lest the trustees change their minds in the future. Although in debate on previous amendments the Minister mentioned that two out of six trustees would be members and also that if any trustees objected to the winding up of a trust fund it would not be wound up, we do not feel that those safeguards are sufficient to protect the long-term pension rights of people who have trusted that their pension rights would be safeguarded for as long as necessary.
One of the problems facing employees—this is something else connected with this amendment which the Minister might like to take up in another place—is that they are now having to choose which pension scheme is best suited to their needs; but people cannot yet make an informed decision because the proposals are still before Parliament, which may change certain features—I hope that we can indeed do so.
It is unfortunate, in view of all this, that the water authorities set a deadline of 31 March 1989, a date which has already passed, to enable employees to transfer to their scheme with pension rights safeguarded. They now say that they will not guarantee the transfer with all qualifying service as of right—that is, transfer on a year-to-year basis of pension payments. They will not say how much and on what terms previous service will count in pension assessment. In view of that, is there any hope that at this very late stage the Government will consider extending the 31 March deadline?
This is another of the amendments by which we would like to make absolutely certain that the present and future well-being of employees is enshrined in the legislation, particularly when it comes to safeguarding the pension rights of people who have been, are and will be employed in the water industry. It is for this reason that we tabled the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 203, Noes 308.

Division No. 135]
[5.35 pm


AYES


Adams, Allen (Paisley N)
Darling, Alistair


Allen, Graham
Davies, Rt Hon Denzil (Llanelli)


Alton, David
Davies, Ron (Caerphilly)


Archer, Rt Hon Peter
Dewar, Donald


Armstrong, Hilary
Dixon, Don


Ashley, Rt Hon Jack
Dobson, Frank


Ashton, Joe
Doran, Frank


Banks, Tony (Newham NW)
Douglas, Dick


Barnes, Harry (Derbyshire NE)
Duffy, A. E. P.


Barnes, Mrs Rosie (Greenwich)
Dunnachie, Jimmy


Barron, Kevin
Dunwoody, Hon Mrs Gwyneth


Battle, John
Eadie, Alexander


Beckett, Margaret
Eastham, Ken


Beith, A. J.
Evans, John (St Helens N)


Bermingham, Gerald
Ewing, Harry (Falkirk E)


Bidwell, Sydney
Ewing, Mrs Margaret (Moray)


Blair, Tony
Fatchett, Derek


Blunkett, David
Faulds, Andrew


Boateng, Paul
Field, Frank (Birkenhead)


Boyes, Roland
Fields, Terry (L'pool B G'n)


Bradley, Keith
Fisher, Mark


Bray, Dr Jeremy
Flannery, Martin


Brown, Gordon (D'mline E)
Flynn, Paul


Brown, Nicholas (Newcastle E)
Foot, Rt Hon Michael


Brown, Ron (Edinburgh Leith)
Foster, Derek


Buchan, Norman
Fraser, John


Buckley, George J.
Fyfe, Maria


Caborn, Richard
Garrett, John (Norwich South)


Callaghan, Jim
Garrett, Ted (Wallsend)


Campbell, Menzies (Fife NE)
Godman, Dr Norman A.


Campbell, Ron (Blyth Valley)
Gould, Bryan


Campbell-Savours, D. N.
Graham, Thomas


Carlile, Alex (Mont'g)
Grant, Bernie (Tottenham)


Cartwright, John
Griffiths, Nigel (Edinburgh S)


Clark, Dr David (S Shields)
Griffiths, Win (Bridgend)


Clarke, Tom (Monklands W)
Grocott, Bruce


Clay, Bob
Hardy, Peter


Clelland, David
Heffer, Eric S.


Clwyd, Mrs Ann
Henderson, Doug


Cohen, Harry
Hinchliffe, David


Coleman, Donald
Hogg, N. (C'nauld &amp; Kilsyth)


Cook, Robin (Livingston)
Holland, Stuart


Corbett, Robin
Home Robertson, John


Corbyn, Jeremy
Hood, Jimmy


Cousins, Jim
Howarth, George (Knowsley N)


Cox, Tom
Howell, Rt Hon D. (S'heath)


Crowther, Stan
Howells, Geraint


Cryer, Bob
Howells, Dr. Kim (Pontypridd)


Cummings, John
Hoyle, Doug


Cunliffe, Lawrence
Hughes, John (Coventry NE)


Cunningham, Dr John
Hughes, Robert (Aberdeen N)


Dalyell, Tam
Hughes, Sean (Knowsley S)






Hughes, Simon (Southwark)
Primarolo, Dawn


Illsley, Eric
Quin, Ms Joyce


Ingram, Adam
Radice, Giles


Janner, Greville
Randall, Stuart


Johnston, Sir Russell
Redmond, Martin


Jones, Barry (Alyn &amp; Deeside)
Rees, Rt Hon Merlyn


Jones, Ieuan (Ynys Môn)
Richardson, Jo


Jones, Martyn (Clwyd S W)
Roberts, Allan (Bootle)


Kennedy, Charles
Robertson, George


Kilfedder, James
Robinson, Geoffrey


Kinnock, Rt Hon Neil
Rogers, Allan


Lambie, David
Ross, Ernie (Dundee W)


Leadbitter, Ted
Ruddock, Joan


Leighton, Ron
Salmond, Alex


Lewis, Terry
Sedgemore, Brian


Litherland, Robert
Sheerman, Barry


Livsey, Richard
Sheldon, Rt Hon Robert


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Skinner, Dennis


Loyden, Eddie
Smith, Andrew (Oxford E)


McAllion, John
Smith, C. (Isl'ton &amp; F'bury)


McAvoy, Thomas
Smith, Rt Hon J. (Monk'ds E)


Macdonald, Calum A.
Spearing, Nigel


McFall, John
Steel, Rt Hon David


McKay, Allen (Barnsley West)
Steinberg, Gerry


McKelvey, William
Stott, Roger


McLeish, Henry
Strang, Gavin


Madden, Max
Straw, Jack


Mahon, Mrs Alice
Taylor, Mrs Ann (Dewsbury)


Marek, Dr John
Taylor, Matthew (Truro)


Marshall, David (Shettleston)
Thompson, Jack (Wansbeck)


Marshall, Jim (Leicester S)
Turner, Dennis


Martlew, Eric
Vaz, Keith


Maxton, John
Wall, Pat


Meacher, Michael
Wallace, James


Michael, Alun
Walley, Joan


Michie, Bill (Sheffield Heeley)
Wardell, Gareth (Gower)


Michie, Mrs Ray (Arg'l &amp; Bute)
Wareing, Robert N.


Morgan, Rhodri
Welsh, Andrew (Angus E)


Morley, Elliott
Welsh, Michael (Doncaster N)


Mowlam, Marjorie
Wigley, Dafydd


Mullin, Chris
Williams, Rt Hon Alan


Murphy, Paul
Williams, Alan W. (Carm'then)


Nellist, Dave
Wilson, Brian


O'Brien, William
Winnick, David


O'Neill, Martin
Worthington, Tony


Orme, Rt Hon Stanley
Young, David (Bolton SE)


Parry, Robert



Patchett, Terry
Tellers for the Ayes:


Pendry, Tom
Mrs. Llin Golding and


Pike, Peter L.
Mr. Frank Haynes.


Powell, Ray (Ogmore)





NOES


Adley, Robert
Bowden, Gerald (Dulwich)


Aitken, Jonathan
Boyson, Rt Hon Dr Sir Rhodes


Alison, Rt Hon Michael
Braine, Rt Hon Sir Bernard


Amess, David
Brandon-Bravo, Martin


Amos, Alan
Brazier, Julian


Arbuthnot, James
Bright, Graham


Arnold, Jacques (Gravesham)
Brooke, Rt Hon Peter


Ashby, David
Brown, Michael (Brigg &amp; Cl't's)


Aspinwall, Jack
Bruce, Ian (Dorset South)


Atkinson, David
Buck, Sir Antony


Baker, Rt Hon K. (Mole Valley)
Budgen, Nicholas


Baker, Nicholas (Dorset N)
Burns, Simon


Baldry, Tony
Burt, Alistair


Banks, Robert (Harrogate)
Butcher, John


Bellingham, Henry
Butterfill, John


Bendall, Vivian
Carlisle, John, (Luton N)


Bennett, Nicholas (Pembroke)
Carlisle, Kenneth (Lincoln)


Bevan, David Gilroy
Carrington, Matthew


Biffen, Rt Hon John
Cash, William


Blackburn, Dr John G.
Channon, Rt Hon Paul


Blaker, Rt Hon Sir Peter
Chapman, Sydney


Boscawen, Hon Robert
Chope, Christopher


Boswell, Tim
Churchill, Mr


Bottomley, Peter
Clark, Hon Alan (Plym'th S'n)


Bottomley, Mrs Virginia
Clark, Dr Michael (Rochford)


Bowden, A (Brighton K'pto'n)
Clark, Sir W. (Croydon S)





Clarke, Rt Hon K. (Rushcliffe)
Howard, Michael


Colvin, Michael
Howarth, Alan (Strat'd-on-A)


Conway, Derek
Howarth, G. (Cannock &amp; B' wd)


Coombs, Anthony (Wyre F'rest)
Howell, Rt Hon David (G'dford)


Coombs, Simon (Swindon)
Howell, Ralph (North Norfolk)


Cormack, Patrick
Hughes, Robert G. (Harrow W)


Couchman, James
Hunt, David (Wirral W)


Cran, James
Hunt, John (Ravensbourne)


Critchley, Julian
Hunter, Andrew


Currie, Mrs Edwina
Irvine, Michael


Curry, David
Jack, Michael


Davies, Q. (Stamf'd &amp; Spald'g)
Jackson, Robert


Davis, David (Boothferry)
Janman, Tim


Day, Stephen
Johnson Smith, Sir Geoffrey


Devlin, Tim
Jones, Gwilym (Cardiff N)


Dicks, Terry
Jones, Robert B (Herts W)


Douglas-Hamilton, Lord James
Jopling, Rt Hon Michael


Dover, Den
Kellett-Bowman, Dame Elaine


Dunn, Bob
Key, Robert


Durant, Tony
King, Roger (B'ham N'thfield)


Dykes, Hugh
Kirkhope, Timothy


Eggar, Tim
Knapman, Roger


Evans, David (Welwyn Hatf'd)
Knight, Greg (Derby North)


Evennett, David
Knight, Dame Jill (Edgbaston)


Fairbairn, Sir Nicholas
Knowles, Michael


Fallon, Michael
Knox, David


Favell, Tony
Lang, Ian


Fenner, Dame Peggy
Latham, Michael


Field, Barry (Isle of Wight)
Lawrence, Ivan


Finsberg, Sir Geoffrey
Lee, John (Pendle)


Fishburn, John Dudley
Leigh, Edward (Gainsbor'gh)


Forman, Nigel
Lennox-Boyd, Hon Mark


Forsyth, Michael (Stirling)
Lilley, Peter


Forth, Eric
Lloyd, Sir Ian (Havant)


Fowler, Rt Hon Norman
Lloyd, Peter (Fareham)


Fox, Sir Marcus
Lord, Michael


Franks, Cecil
Luce, Rt Hon Richard


Freeman, Roger
Lyell, Sir Nicholas


French, Douglas
McCrindle, Robert


Fry, Peter
Macfarlane, Sir Neil


Gale, Roger
MacKay, Andrew (E Berkshire)


Gardiner, George
Maclean, David


Garel-Jones, Tristan
McLoughlin, Patrick


Gill, Christopher
McNair-Wilson, Sir Michael


Glyn, Dr Alan
McNair-Wilson, P. (New Forest)


Goodhart, Sir Philip
Madel, David


Goodlad, Alastair
Major, Rt Hon John


Goodson-Wickes, Dr Charles
Malins, Humfrey


Gorman, Mrs Teresa
Mans, Keith


Gorst, John
Maples, John


Gow, Ian
Marlow, Tony


Grant, Sir Anthony (CambsSW)
Marshall, John (Hendon S)


Greenway, Harry (Ealing N)
Martin, David (Portsmouth S)


Greenway, John (Ryedale)
Mates, Michael


Gregory, Conal
Maude, Hon Francis


Griffiths, Peter (Portsmouth N)
Mayhew, Rt Hon Sir Patrick


Grist, Ian
Mellor, David


Ground, Patrick
Miller, Sir Hal


Gummer, Rt Hon John Selwyn
Mills, Iain


Hague, William
Miscampbell, Norman


Hamilton, Hon Archie (Epsom)
Mitchell, Andrew (Gedling)


Hamilton, Neil (Tatton)
Mitchell, Sir David


Hampson, Dr Keith
Moate, Roger


Hanley, Jeremy
Montgomery, Sir Fergus


Hannam, John
Morris, M (N'hampton S)


Hargreaves, A. (B'ham H'Il Gr')
Morrison, Sir Charles


Hargreaves, Ken (Hyndburn)
Moss, Malcolm


Harris, David
Moynihan, Hon Colin


Haselhurst, Alan
Mudd, David


Hawkins, Christopher
Neale, Gerrard


Hayes, Jerry
Nelson, Anthony


Hayhoe, Rt Hon Sir Barney
Neubert, Michael


Hayward, Robert
Nicholson, David (Taunton)


Heathcoat-Amory, David
Nicholson, Emma (Devon Wost)


Hicks, Mrs Maureen (Wolv' NE)
Norris, Steve


Higgins, Rt Hon Terence L.
Onslow, Rt Hon Cranley


Hill, James
Oppenheim, Phillip


Hind, Kenneth
Page, Richard


Hogg, Hon Douglas (Gr'th'm)
Paice, James


Holt, Richard
Parkinson, Rt Hon Cecil






Patnick, Irvine
Stewart, Andy (Sherwood)


Patten, Chris (Bath)
Stradling Thomas, Sir John


Patten, John (Oxford W)
Sumberg, David


Pattie, Rt Hon Sir Geotfrey
Tapsell, Sir Peter


Pawsey, James
Taylor, Ian (Esher)


Porter, Barry (Wirral S)
Taylor, John M (Solihull)


Porter, David (Waveney)
Taylor, Teddy (S'end E)


Portillo, Michael
Temple-Morris, Peter


Powell, William (Corby)
Thompson, D. (Calder Valley)


Price, Sir David
Thompson, Patrick (Norwich N)


Raffan, Keith
Thorne, Neil


Raison, Rt Hon Timothy
Thornton, Malcolm


Rathbone, Tim
Thurnham, Peter


Redwood, John
Townend, John (Bridlington)


Renton, Tim
Townsend, Cyril D. (B'heath)


Rhodes James, Robert
Tracey, Richard


Riddick, Graham
Tredinnick, David


Ridley, Rt Hon Nicholas
Trippier, David


Ridsdale, Sir Julian
Trotter, Neville


Rifkind, Rt Hon Malcolm
Twinn, Dr Ian


Roberts, Wyn (Conwy)
Vaughan, Sir Gerard


Rossi, Sir Hugh
Viggers, Peter


Rost, Peter
Waddington, Rt Hon David


Rowe, Andrew
Wakeham, Rt Hon John


Rumbold, Mrs Angela
Waldegrave, Hon William


Ryder, Richard
Walden, George


Sackville, Hon Tom
Waller, Gary


Sainsbury, Hon Tim
Walters, Sir Dennis


Sayeed, Jonathan
Ward, John


Scott, Nicholas
Wardle, Charles (Bexhill)


Shaw, Sir Giles (Pudsey)
Watts, John


Shaw, Sir Michael (Scarb')
Wells, Bowen


Shelton, Sir William
Wheeler, John


Shephard, Mrs G. (Norfolk SW)
Whitney, Ray


Shepherd, Colin (Hereford)
Widdecombe, Ann


Sims, Roger
Wiggin, Jerry


Skeet, Sir Trevor
Wilkinson, John


Smith, Sir Dudley (Warwick)
Wilshire, David


Smith, Tim (Beaconsfield)
Winterton, Mrs Ann


Soames, Hon Nicholas
Wolfson, Mark


Speller, Tony
Wood, Timothy


Spicer, Sir Jim (Dorset W)
Woodcock, Mike


Spicer, Michael (S Worcs)
Yeo, Tim


Squire, Robin
Young, Sir George (Acton)


Stanbrook, Ivor
Younger, Rt Hon George


Stanley, Rt Hon Sir John



Steen, Anthony
Tellers for the Noes:


Stern, Michael
Mr. David Lightbown and


Stevens, Lewis
Mr. Stephen Dorrell.


Stewart. Allan (Eastwood)

Question accordingly negatived.

Schedule 4

CUSTOMER SERVICE COMMITTEES

Amendment made: No. 96 in page 194, line 2, at end insert—

'Public access to meetings

7. In paragraph 1 of the Schedule to the Public Bodies (Admission to Meetings) Act 1960 (bodies to which Act applies in England and Wales), at the end there shall be inserted the following sub-paragraph—

"(i) customer service committees established and
maintained under the Water Act 1989.";
and the functions of a customer service committee shall be regarded as public functions for the purposes of that Act.'.—[Miss Emma Nicholson.],

Schedule 5

TRANSITIONAL PROVISION ON TERMINATION OF APPOINTMENTS

Mr. Moynihan: I beg to move amendment No. 12, in page 198, line 9 leave out from 'provision' to end of line 11 and insert

'which corresponds in relation to any enactment mentioned in Schedule 23 to this Act to any provision made by that Schedule or makes similar provision in relation to any other enactment;'. 
Schedule 5(6) enables the Secretary of State, in connection with the making of a replacement appointment or variation of area under clause 11, to make transitional provisions and savings, if he thinks it appropriate, by order. The paragraph as drafted allows any provision corresponding to one made in relation to the transfer date by schedule 23.
The purpose of this technical amendment is simply to broaden schedule 5(6) so that, following the making of a replacement appointment or variation of area, it will be possible to make transitional provisions which correspond not only to the provisions made in respect of the legislation mentioned in schedule 23 but also to other, for example future, legislation.

Amendment agreed to.

Schedule 8

SEWERAGE FUNCTIONS

Mr. Edward Leigh: I beg to move amendment No. 145, in page 208, line 9, at end insert—

'Rural Water Supplies and Sewerage Act 1944 (c. 26)
(1) In section 1(1) of the Rural Water Supplies and Sewerage Act 1944 (government contributions towards expenses of water authorities for the purposes of rural water supplies and sewerage) the words "subject to such conditions as the Treasury may determine," shall be omitted. 
(2) For the words "may, in any case in which it appears to him to be desirable so to do, undertake to make a contribution" there shall be substituted the words "shall make a contribution of at least 50 per cent.". 
(3) The words "provided that the Minister shall not undertake to make a contribution towards the expenses of making provision for the sewerage, or the disposal of the sewage, of a rural locality unless he is satisfied that the need for making the provision is due to anything done or proposed to be done, whether before or after the passing of this Act, to supply, or increase the supply of, water in pipes in that locality." shall be omitted.'.

As I represent a rural constituency, I am moving this probing amendment so that I may ask the Minister some questions which are of interest to those who live in rural areas.

At present, local Government meets about 50 per cent. of the cost of the schemes to which my amendment refers and I am wondering how much of present legislation is a legacy of the past. In 1989, sewerage services should be available in all areas, except in really isolated places where provision would be uneconomic. Under current requisition procedures, rural sewerage facilities are not being provided adequately, and it would seem that the Government should adopt a totally different approach to this issue.

When I raised the matter in Committee I said that, while the problem affected only about 5 per cent. of households, it was serious problem nevertheless. I am not suggesting the schemes should apply to isolated houses or hamlets, but, as I said in Committee, some quite large villages can be without sewerage schemes. For example, Wormley in Surrey is a semi-urban area with about 400 houses, and Claxby in my constituency is a relatively large village which has been campaigning for some time to have a sewerage scheme.

Under existing legislation, water authorities have a general duty to provide such a scheme, but the local authority must requisition the scheme. As the local authority pays about 50 per cent. of the cost, there is no incentive for the authority to do that. That results in much buck-passing among local authorities, water authorities and the Government, so that schemes of this type rarely come to light.

I do not suggest that my amendment is the only way forward or that the Government should necessarily pay as large a contribution as I suggest. I hope, however, that the Government will look into the problem which, while small in national terms, is important to rural communities.

Mr. Wigley: I support the amendmemt because the circumstances described by the hon. Member for Gainsborough and Horncastle (Mr. Leigh) obtain in many rural areas. They certainly do in mine, and I would not belittle scattered hamlets, which also have the right to modern facilities.
It is important for us to consider how financial assistance of the type that we are discussing will be available once the Bill becomes law. In that context, the amendment may not go far enough, but it would be a move in the right direction, and considering that it has been proposed by a Government Member, we in the Opposition should support it.
The hon. Gentleman described it as a probing amendment. I regard it as stronger than that. It should be added to the Bill; and if the Government say that it is too untidy as drafted, they could accept the principle involved in it and tidy it up in another place.

Mr. Moynihan: Clause 69 gives owners, occupiers and certain public bodies, including local authorities, the right to require a sewerage undertaker to provide a public sewer. The person requisitioning the sewer is required to pay over 12 years any difference between the charges for the use of the sewer and the cost incurred by the undertaker in providing it.
Rural sewerage grant is available under the Rural Water Supplies and Sewerage Act 1944 to reduce the cost which would otherwise fall on those requisitioning a public sewer. It is paid to the undertaker on condition that it is used to reduce the deficit payments required from the local authority or the owners and occupiers requisitioning schemes. The grant is paid at the rate of 35 per cent. of the eligible cost of a scheme or 35 per cent. of £3,310 per property served, whichever is the lower. In 1987–88, grant totalling £4 million was approved in respect of 68 sewerage schemes.
The purpose of amendment 145, as my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) pointed out, is to require the Secretary of State to pay grant at a rate of at least 50 per cent. of the cost of the works. I believe that it would be unfair and undesirable to increase the rate of grant in the way my hon. Friend suggests and to compel the Secretary of State to pay grant in all cases at a particular minimum level.

Mr. Wigley: Why?

Mr. Moynihan: Because it would favour those areas where provision of necessary first-time sewerage had been slow in comparison with areas where the water authority and the local authorities between them had made good progress. It would be undesirable because higher rates of

grant would remove to some extent the financial discipline on both water undertakers and local authorities to ensure that requisitioned schemes were both justified and economically designed.
I hope that what I have said will reassure my hon. Friend about the arrangements and that he will agree to withdraw the amendment.

Mr. Leigh: I beg to ask leave to withdraw the amendment.

Hon. Members: No.

Madam Deputy Speaker (Miss Betty Boothroyd): In that case, I must put the Question.

Question put, That the amendment be made:—

The House divided: Ayes 172, Noes 310.

Division No. 136]
[5.59 pm


AYES


Adams, Allen (Paisley N)
Fyfe, Maria


Allen, Graham
Garrett, Ted (Wallsend)


Alton, David
Godman, Dr Norman A.


Archer, Rt Hon Peter
Golding, Mrs Llin


Armstrong, Hilary
Graham, Thomas


Ashley, Rt Hon Jack
Grant, Bernie (Tottenham)


Ashton, Joe
Griffiths, Nigel (Edinburgh S)


Banks, Tony (Newham NW)
Griffiths, Win (Bridgend)


Barnes, Harry (Derbyshire NE)
Hardy, Peter


Barnes, Mrs Rosie (Greenwich)
Haynes, Frank


Barron, Kevin
Heffer, Eric S.


Battle, John
Henderson, Doug


Beith, A. J.
Hinchliffe, David


Bennett, A. F. (D'nt'n &amp; R'dish)
Hogg, N. (C'nauld &amp; Kilsyth)


Bidwell, Sydney
Hood, Jimmy


Blair, Tony
Howarth, George (Knowsley N)


Blunkett, David
Howell, Rt Hon D. (S'heath)


Boateng, Paul
Howells, Geraint


Boyes, Roland
Howells, Dr. Kim (Pontypridd)


Bradley, Keith
Hoyle, Doug


Brown, Gordon (D'mline E)
Hughes, John (Coventry NE)


Brown, Nicholas (Newcastle E)
Hughes, Sean (Knowsley S)


Buckley, George J.
Hughes, Simon (Southwark)


Campbell, Menzies (Fife NE)
Illsley, Eric


Campbell, Ron (Blyth Valley)
Ingram, Adam


Carlile, Alex (Mont'g)
Janner, Greville


Clark, Dr David (S Shields)
Johnston, Sir Russell


Clarke, Tom (Monklands W)
Jones, Barry (Alyn &amp; Deeside)


Clay, Bob
Jones, Ieuan (Ynys Môn)


Clelland, David
Jones, Martyn (Clwyd S W)


Clwyd, Mrs Ann
Kennedy, Charles


Cohen, Harry
Kilfedder, James


Coleman, Donald
Kinnock, Rt Hon Neil


Cook, Robin (Livingston)
Lambie, David


Corbyn, Jeremy
Leighton, Ron


Cox, Tom
Lewis, Terry


Cryer, Bob
Lofthouse, Geoffrey


Cummings, John
Loyden, Eddie


Cunliffe, Lawrence
McAllion, John


Cunningham, Dr John
McAvoy, Thomas


Dalyell, Tam
Macdonald, Calum A.


Darling, Alistair
McFall, John


Davies, Ron (Caerphilly)
McKay, Allen (Barnsley West)


Dewar, Donald
McKelvey, William


Dixon, Don
McLeish, Henry


Dobson, Frank
McWilliam, John


Doran, Frank
Mahon, Mrs Alice


Duffy, A. E. P.
Marek, Dr John


Dunnachie, Jimmy
Marshall, David (Shettleston)


Dunwoody, Hon Mrs Gwyneth
Marshall, Jim (Leicester S)


Eastham, Ken
Martlew, Eric


Evans, John (St Helens N)
Maxton, John


Ewing, Mrs Margaret (Moray)
Meacher, Michael


Fatchett, Derek
Michael, Alun


Fields, Terry (L'pool B G'n)
Michie, Bill (Sheffield Heeley)


Fisher, Mark
Michie, Mrs Ray (Arg'l &amp; Bute)


Foot, Rt Hon Michael
Morgan, Rhodri


Foster, Derek
Morley, Elliott






Morris, Rt Hon J. (Aberavon)
Skinner, Dennis


Mowlam, Marjorie
Smith, Andrew (Oxford E)


Mullin, Chris
Smith, Rt Hon J. (Monk'ds E)


Murphy, Paul
Soley, Clive


Nellist, Dave
Spearing, Nigel


O'Brien, William
Steel, Rt Hon David


O'Neill, Martin
Steinberg, Gerry


Orme, Rt Hon Stanley
Stott, Roger


Parry, Robert
Strang, Gavin


Patchett, Terry
Straw, Jack


Pendry, Tom
Taylor, Mrs Ann (Dewsbury)


Pike, Peter L.
Taylor, Matthew (Truro)


Powell, Ray (Ogmore)
Thompson, Jack (Wansbeck)


Primarolo, Dawn
Turner, Dennis


Quin, Ms Joyce
Vaz, Keith


Radice, Giles
Wall, Pat


Randall, Stuart
Wallace, James


Redmond, Martin
Walley, Joan


Rees, Rt Hon Merlyn
Wardell, Gareth (Gower)


Richardson, Jo
Wareing, Robert N.


Roberts, Allan (Bootle)
Welsh, Michael (Doncaster N)


Robertson, George
Williams, Rt Hon Alan


Rogers, Allan
Williams, Alan W. (Carm'then)


Rooker, Jeff
Winnick, David


Ross, Ernie (Dundee W)
Worthington, Tony


Ruddock, Joan
Young, David (Bolton SE)


Salmond, Alex



Sedgemore, Brian
Tellers for the Ayes:


Sheldon, Rt Hon Robert
Mr. Dafydd Wigley and


Shore, Rt Hon Peter
Mr. Richard Livsey.




NOES


Adley, Robert
Chapman, Sydney


Aitken, Jonathan
Chope, Christopher


Alison, Rt Hon Michael
Churchill, Mr


Amery, Rt Hon Julian
Clark, Hon Alan (Plym'th S'n)


Amess, David
Clark, Dr Michael (Rochford)


Amos, Alan
Clark, Sir W. (Croydon S)


Arbuthnot, James
Clarke, Rt Hon K. (Rushcliffe)


Arnold, Jacques (Gravesham)
Colvin, Michael


Ashby, David
Conway, Derek


Aspinwall, Jack
Coombs, Anthony (Wyre F'rest)


Atkins, Robert
Coombs, Simon (Swindon)


Atkinson, David
Cormack, Patrick


Baker, Rt Hon K. (Mole Valley)
Couchman, James


Baker, Nicholas (Dorset N)
Cran, James


Baldry, Tony
Critchley, Julian


Banks, Robert (Harrogate)
Currie, Mrs Edwina


Bellingham, Henry
Curry, David


Bendall, Vivian
Davies, Q. (Stamf'd &amp; Spald'g)


Bennett, Nicholas (Pembroke)
Davis, David (Boothferry)


Bevan, David Gilroy
Day, Stephen


Biffen, Rt Hon John
Devlin, Tim


Blackburn, Dr John G.
Dicks, Terry


Blaker, Rt Hon Sir Peter
Douglas-Hamilton, Lord James


Boscawen, Hon Robert
Dover, Den


Boswell, Tim
Dunn, Bob


Bottomley, Peter
Durant, Tony


Bottomley, Mrs Virginia
Eggar, Tim


Bowden, A (Brighton K'pto'n)
Emery, Sir Peter


Bowden, Gerald (Dulwich)
Evans, David (Welwyn Hatf'd)


Boyson, Rt Hon Dr Sir Rhodes
Evennett, David


Braine, Rt Hon Sir Bernard
Fairbairn, Sir Nicholas


Brandon-Bravo, Martin
Fallon, Michael


Brazier, Julian
Favell, Tony


Bright, Graham
Fenner, Dame Peggy


Brooke, Rt Hon Peter
Field, Barry (Isle of Wight)


Brown, Michael (Brigg &amp; Cl't's)
Finsberg, Sir Geoffrey


Bruce, Ian (Dorset South)
Fishburn, John Dudley


Buck, Sir Antony
Forman, Nigel


Budgen, Nicholas
Forsyth, Michael (Stirling)


Burns, Simon
Forth, Eric


Burt, Alistair
Fowler, Rt Hon Norman


Butcher, John
Fox, Sir Marcus


Butterfill, John
Franks, Cecil


Carlisle, John, (Luton N)
Freeman, Roger


Carlisle, Kenneth (Lincoln)
French, Douglas


Carrington, Matthew
Fry, Peter


Cash, William
Gale, Roger


Channon, Rt Hon Paul
Gardiner, George





Garel-Jones, Tristan
MacKay, Andrew (E Berkshire)


Gill, Christopher
Maclean, David


Glyn, Dr Alan
McLoughlin, Patrick


Goodhart, Sir Philip
McNair-Wilson, Sir Michael


Goodlad, Alastair
McNair-Wilson, P. (New Forest)


Goodson-Wickes, Dr Charles
Madel, David


Gorman, Mrs Teresa
Major, Rt Hon John


Gorst, John
Malins, Humfrey


Gow, Ian
Mans, Keith


Grant, Sir Anthony (CambsSW)
Maples, John


Greenway, Harry (Ealing N)
Marlow, Tony


Greenway, John (Ryedale)
Marshall, John (Hendon S)


Gregory, Conal
Martin, David (Portsmouth S)


Griffiths, Peter (Portsmouth N)
Mates, Michael


Grist, Ian
Maude, Hon Francis


Ground, Patrick
Mayhew, Rt Hon Sir Patrick


Gummer, Rt Hon John Selwyn
Mellor, David


Hague, William
Miller, Sir Hal


Hamilton, Hon Archie (Epsom)
Mills, Iain


Hamilton, Neil (Tatton)
Mitchell, Andrew (Gedling)


Hampson, Dr Keith
Mitchell, Sir David


Hanley, Jeremy
Moate, Roger


Hannam, John
Montgomery, Sir Fergus


Hargreaves, A. (B'ham H'll Gr')
Morris, M (N'hampton S)


Hargreaves, Ken (Hyndburn)
Morrison, Sir Charles


Harris, David
Moss, Malcolm


Haselhurst, Alan
Moynihan, Hon Colin


Hawkins, Christopher
Mudd, David


Hayes, Jerry
Neale, Gerrard


Hayhoe, Rt Hon Sir Barney
Nelson, Anthony


Hayward, Robert
Neubert, Michael


Heathcoat-Amory, David
Newton, Rt Hon Tony


Heseltine, Rt Hon Michael
Nicholls, Patrick


Hicks, Mrs Maureen (Wolv' NE)
Nicholson, David (Taunton)


Higgins, Rt Hon Terence L.
Nicholson, Emma (Devon West)


Hill, James
Norris, Steve


Hind, Kenneth
Onslow, Rt Hon Cranley


Hogg, Hon Douglas (Gr'th'm)
Oppenheim, Phillip


Holt, Richard
Page, Richard


Howard, Michael
Paice, James


Howarth, Alan (Strat'd-on-A)
Parkinson, Rt Hon Cecil


Howarth, G. (Cannock &amp; B'wd)
Patnick, Irvine


Howell, Rt Hon David (G'dford)
Patten, Chris (Bath)


Howell, Ralph (North Norfolk)
Patten, John (Oxford W)


Hughes, Robert G. (Harrow W)
Pattie, Rt Hon Sir Geoffrey


Hunt, David (Wirral W)
Pawsey, James


Hunt, John (Ravensbourne)
Porter, Barry (Wirral S)


Hunter, Andrew
Porter, David (Waveney)


Irvine, Michael
Portillo, Michael


Irving, Charles
Powell, William (Corby)


Jack, Michael
Price, Sir David


Jackson, Robert
Raffan, Keith


Janman, Tim
Raison, Rt Hon Timothy


Johnson Smith, Sir Geoffrey
Rathbone, Tim


Jones, Gwilym (Cardiff N)
Redwood, John


Jones, Robert B (Herts W)
Renton, Tim


Jopling, Rt Hon Michael
Rhodes James, Robert


Kellett-Bowman, Dame Elaine
Riddick, Graham


Key, Robert
Ridley, Rt Hon Nicholas


King, Roger (B'ham N'thfield)
Ridsdale, Sir Julian


Kirkhope, Timothy
Rifkind, Rt Hon Malcolm


Knapman, Roger
Roberts, Wyn (Conwy)


Knight, Greg (Derby North)
Rossi, Sir Hugh


Knight, Dame Jill (Edgbaston)
Rost, Peter


Knowles, Michael
Rowe, Andrew


Knox, David
Rumbold, Mrs Angela


Lamont, Rt Hon Norman
Ryder, Richard


Lang, Ian
Sackville, Hon Tom


Latham, Michael
Sainsbury, Hon Tim


Lawrence, Ivan
Sayeed, Jonathan


Lee, John (Pendle)
Scott, Nicholas


Lennox-Boyd, Hon Mark
Shaw, Sir Giles (Pudsey)


Lilley, Peter
Shaw, Sir Michael (Scarb')


Lloyd, Sir Ian (Havant)
Shephard, Mrs G. (Norfolk SW)


Lloyd, Peter (Fareham)
Shepherd, Colin (Hereford)


Lord, Michael
Sims, Roger


Luce, Rt Hon Richard
Skeet, Sir Trevor


Lyell, Sir Nicholas
Smith, Sir Dudley (Warwick)


McCrindle, Robert
Smith, Tim (Beaconsfield)


Macfarlane, Sir Neil
Soames, Hon Nicholas






Speller, Tony
Vaughan, Sir Gerard


Spicer, Sir Jim (Dorset W)
Viggers, Peter


Spicer, Michael (S Worcs)
Waddington, Rt Hon David


Squire, Robin
Wakeham, Rt Hon John


Stanbrook, Ivor
Waldegrave, Hon William


Stanley, Rt Hon Sir John
Walden, George


Steen, Anthony
Walker, Rt Hon P. (W'cester)


Stern, Michael
Waller, Gary


Stevens, Lewis
Walters, Sir Dennis


Stewart, Allan (Eastwood)
Ward, John


Stewart, Andy (Sherwood)
Wardle, Charles (Bexhill)


Stradling Thomas, Sir John
Watts, John


Sumberg, David
Wells, Bowen


Summerson, Hugo
Wheeler, John


Tapsell, Sir Peter
Whitney, Ray


Taylor, Ian (Esher)
Widdecombe, Ann


Taylor, John M (Solihull)
Wiggin, Jerry


Temple-Morris, Peter
Wilkinson, John


Thompson, D. (Calder Valley)
Wilshire, David


Thompson, Patrick (Norwich N)
Wolfson, Mark


Thorne, Neil
Wood, Timothy


Thornton, Malcolm
Woodcock, Mike


Thurnham, Peter
Yeo, Tim


Townsend, Cyril D. (B'heath)
Young, Sir George (Acton)


Tracey, Richard
Younger, Rt Hon George


Tredinnick, David



Trippier, David
Tellers for the Noes:


Trotter, Neville
Mr. David Lightbown and


Twinn, Dr Ian
Mr. Stephen Dorrell.

Question accordingly negatived.

It being after Six o'clock, MADAM DEPUTY SPEAKER proceeded, pursuant to the Order [6 February] and the resolutions [21 March] to put forthwith the Questions on the remaining amendments moved by a member of the Government.

Schedule 10

PROVISIONS RELATING TO METERS ETC.

Amendments made: No. 65, in page 214, line 52, at end insert—
'(1A) The power under sub-paragraph (1) to carry out works specified in sub-paragraph (2) below shall include power to carry out such works in a street; and the power conferred by virtue of sub-paragraph (1) (c) of paragraph 2 of Schedule 18 to this Act and sub-paragraphs (4) to (6), (8) and (9) of that paragraph and paragraph 3 of that Schedule shall apply in relation to the power conferred by this sub-paragraph as they apply in relation to the powers conferred by the said paragraph 2.'.

No. 66, in page 215, line 1, leave out 'sub-paragraph (1)' and insert
'sub-paragraphs (I) and (1A)'.

No. 67, in page 215, line 13, leave out 'on those premises'.

No. 68, in page 216, line 10, leave out 'on any premises'.

No. 69, in page 216, line 46, after 'above', insert 'on any premises'.

No. 70, in page 218, line 14, after 'works', insert 'on any premises'.—[Mr. Ridley.]

Schedule 12

AMENDMENTS OF THE WATER RESOURCES ACT 1963

Amendments made: No. 28, in page 230, line 25, at end insert—
'(3) In subsection (6) of that section, at the end there shall be inserted the words "and the quantity of water authorised to be abstracted from the strata in any period of twenty-four hours does not exceed twenty cubic metres in aggregate.".'.

No. 29, in page 233, line 5, at end insert—

'Section 131 of the 1963 Act

.—(1) In section 131 (2) (a) of the 1963 Act (licence in

respect of waters owned or managed by the British Waterways Board), after "Act" there shall be inserted the words "and no person other than the Board or a person authorised for the purpose by the Board may be given a consent for the purposes of section 24 (1A) of this Act".'.—[Mr. Ridley.]

Schedule 14

AMENDMENTS OF THE LAND DRAINAGE ACT I976

Amendments made: No. 49, in page 242, line 43, leave out 'by the Minister' and insert
'jointly by the Minister of Agriculture, Fisheries and Food and the Secretary of State'.

No. 50, in page 243, line 16, leave out 'by the Minister' and insert
'jointly by the Minister of Agriculture, Fisheries and Food and the Secretary of State'.—[Mr. Ridley.]

Schedule 16

TRANSFER OF FISHERIES FUNCTIONS TO THE AUTHORITY.

Amendments made: No. 4, in page 255, line 4, at end insert
'( ) In section 6(3) (definition of "unauthorised fixed engine"), at the end of paragraph (c) there shall be inserted the words "or

(d) a fixed engine which is placed and used by the National Rivers Authority with the consent of, or in accordance with a general authorisation given by, the Minister or the Secretary of State."'.

No. 5, in page 255, line 19, leave out from '(3)' to end of line 20 and insert
'for the words from "by", in the first place whre it occurs, onwards three shall be substituted the words "on an application made to him by the National Rivers Authority, by order made by statutory instrument make provision in relation to an area defined by the order—

(a) for the imposition on the owners and occupiers of fisheries in that area of requirements to pay contributions to that Authority of such amounts as may be determined under the order in respect of the expenses of the carrying out in relation to that area of that Authority's functions with respect to fisheries;
(b) for such contributions to be paid or recovered in such manner and to be refundable in such circumstances as may be specified in or determined under the order;
(c) for the modification, in relation to the fisheries in that area, of any provisions of this Act relating to the regulation of fisheries or of any provisions of a local Act relating to any fishery in that area;
and an order under this subsection may contain such supplemental, consequential and transitional provision, including provision for the payment of compensation to persons injuriously affected by the order, as may appear to be necessary or expedient in connection with the other provisions of the order."'.—[Mr. Ridley.]

Schedule 18

POWERS WITH RESPECT TO THE LAYING AND MAINTENANCE OF PIPES ETC.

Amendments made: No. 71, in page 260, line 5, after '(4)' insert
'Without prejudice to paragraph 1 (1A) of Schedule 10 to this Act,'—

page 263, line 50, at end insert—
'(6A) Where, apart from this sub-paragraph, any person entitled to an interest in any land would be entitled under this paragraph to an amount of compensation in respect of any works, there shall be


deducted from that amount an amount equal to the amount by which the carrying out of the works has enhanced the value of any other land which—

(a) is contiguous or adjacent to that land; and
(b) is land to an interest in which that person is entitled in the same capacity.'.—[Mr. Ridley.]

Schedule 22

MINOR AND CONSEQUENTIAL AMENDMENTS

Amendments made: No. 73, in page 290, line 41, at end insert—
'and, in paragraph 12(6), after the words "paragraph (b)" there shall be inserted the words "or paragraph (bb)".'.

No. 74, in page 291, line 31 after 'undertakers', insert
'or the National Rivers Authority'.

No. 75, in page 291, line 32, after 'undertakers', insert
'or the National Rivers Authority'.

No. 76, in page 291, line 34, after 'undertakers', insert
'or the National Rivers Authority'.

No. 42, in page 299, line 6, at end insert—

'The Water (Scotland) Act 1980 (c. 45)

50A. In section 31 of the Water (Scotland) Act 1980 (consultation with authorities in England) for the words "water authorities" there shall be substituted the words "water undertakers".'.

No. 6, in page 305, line 44, at end insert—
'(3) In paragraph 10(1)(b) of Schedule 5 to that Act (exemption for hereditaments subject to contributions under paragraph 1(a) of Schedule 3 to the Salmon and Freshwater Fisheries Act (1975), for the words from "paragraph 1(a)" onwards there shall be substituted the words "section 28(3)(a) of that Act.".".—[Mr. Ridley.]

Schedule 23

TRANSITIONAL PROVISIONS AND SAVINGS

Amendments made: No. 92, in page 306, line 11, at end insert—
'(2) The Secretary of State may by regulations provide for any liability which is—

(a) saved by virtue of this paragraph; and
(b) transferred in accordance with a scheme under Schedule 2 to this Act to a successor company,
to be transferred, at a time when that company is wholly owned by the Crown, to that company's nominated holding company.'.

No. 93, in page 306, line 18, at end insert—

'(2) The Secretary of State may by regulations make such transitional provisions and savings as he considers appropriate in relation to so much of any provision having effect immediately before the transfer date by or under any enactment as provides for or relates to the payment by a water authority of pensions, allowances or gratuities to or in respect of persons who have been—

(a) officers or employees of any person whose activities at any time before the transfer date appear to the Secretary of State to have consisted in, or to have been connected with, the carrying out of any function which is transferred by this Act or which corresponds to any such function or to any other function under this Act; or
(b) chairmen or members of any body whose activities at any such time so appear to the Secretary of State.

(3)Without prejudice to the generality of sub-paragraph

(2) above or to any transfer in accordance with a scheme under Schedule 2 to this Act of any liability saved by regulations under that sub-paragraph such regulations may—

(a) subject to sub-paragraphs (4) and (5) below, impose requirements on the Authority, on any successor company or on the nominated holding company of any successor company;
(b) modify any such provision as is mentioned in sub-paragraph (2) above;
(c) in the case of regulations made after the transfer date, require provision contained in the regulations to be treated as if it came into force on that date.

(4) No requirement shall be imposed on any company by any regulations under sub-paragraph (2) above made after the company has ceased to be wholly owned by the Crown; but a company's ceasing to be wholly owned by the Crown shall not affect any requirement imposed on it by any regulations under that sub-paragraph made before the company ceased to be so wholly owned.

(5) It shall be the duty of the Secretary of State to pay the Authority out of money provided by Parliament all such sums as the Authority may require for fulfilling requirements imposed on it by regulations under sub-paragraph (2) above.

(6) The reference in sub-paragraph (2) above to the payment of pensions, allowances or gratuities includes a reference to the payment of compensation for loss of office or of any such compensation as is payable to or in respect of an officer or employee for any other reason.'

No. 22, in page 310, line 37, leave out from beginning
to 'in' in line 39 and insert—
'(4) On and after the transfer date subsection (6A) of section 70 of this Act shall apply, as it applies in relation to the sums mentioned in that subsection,'.

No. 60, in page 319, line 20, at end insert
'; and no licence may be granted by virtue of this paragraph in relation to any waters to which section 131 of the 1963 Act applies (waters owned or managed by the British Waterways Board) unless—

(a) the application for the licence was accompanied by the prescribed evidence that notice of the application was served on the British Waterways Board; and
(b) the Authority has considered any representations or objections made by that Board within the period of twenty-eight days beginning with the day on which the application was made or such longer period as the Authority may allow.'.

No. 77, in page 320, line 24, after 'sections', insert
'and Part II of the said Act of 1965'.

No. 30, in page 321, line 40, at end insert—
'. The repeal by this Act of the Drought Act 1976 shall not affect—

(a) any order under that Act which is in force immediately before the transfer date;
(b) any power to make an order under that Act on an application (whether made before, on or after that date) of which notice was given before that date; or
(c) the operation of the provisions of that Act in relation to any such order or application;
but, in relation to any time on or after that date, that Act and anything done under it shall have effect by virtue of this paragraph as if references to a water authority were references to the successor company of that water authority.'.

No. 7, in page 323, line 25, at end insert—
'(4) Nothing in this Act shall be construed as preventing so much of any order under section 28(3) of the Salmon and Freshwater Fisheries Act 1975 or of any licence under Part I of Schedule 3 to that Act as—

(a) is in force immediately before the transfer date; and
(b) has the effect for the purposes of section 6 of that Act (prohibition on placing and use of unauthorised fixed engines) of authorising the placing or use of any fixed engine,
from continuing to have that effect on and after that date.'.

No. 87, in page 327, line 33 at end insert—

'Transitory provision relating to rating

.—(1) In relation to the period beginning with the transfer date and ending with 31st March 1990, the provisions of section 31 of and Schedule 4 to the General Rate Act 1967 (valuation of water hereditaments) shall have effect—

(a) as if references in those provisions to any statutory water undertakers or to their undertaking included references to a water undertaker or to the undertaking of a water undertaker;
(b) as if the successor company of a water authority were the same person in law as the water company; and
(c) as if any hereditament which—

(i) is occupied on and after that date by the Authority; and


(ii) was occupied, immediately before that date, by a water authority for the purposes of their functions with respect to the supply of water, 
were a water hereditament occupied by that water authority's successor company for the purposes of the company's functions (as a water undertaker) with respect to the supply of water.

(2) Where any hereditament allocated to the Authority by a scheme under Schedule 2 to this Act will fall on and after the transfer date to be treated for the purposes of the provisions mentioned in sub-paragraph (1) above as occupied by a successor company, that scheme may require the Authority to make payments to the successor company, of such amounts and at such time as may be determined in accordance with the scheme, by way of contributions in respect of any liability of the successor company in consequence of those provisions.

(3) In relation to the period mentioned in sub-paragraph (1) above, section 43 of the said Act of 1967 (exemption of property of certain authorities) shall have effect, subject to that sub-paragraph, as if the references in that section to a water authority and to a drainage authority included references, respectively, to the Authority and to an internal drainage board. '.—[Mr. Ridley.]

Schedule 24

REPEALS

Amendments made: No. 8, in page 339, line 33, column 3, leave out '5,' and insert '1 to'.

No. 38, in page 346, leave out lines 26 to 30.—[Mr. Ridley.]

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's consent, on behalf of the Duchy of Cornwall, signified.]

The Secretary of State for the Environment (Mr. Nicholas Ridley): I beg to move, That the Bill be now read the Third time.
Out of the three days for the remaining stages of this Bill, the Opposition have chosen to use a quarter of the time on the Third Reading. On this occasion I think they were right: they completely failed to fault the Bill in Committee and the details were found to be correct. My hon. Friends, the two Ministers of State and the two Under-Secretaries of State, totally dominated the argument throughout the Committee stage. On Third Reading, we come back to the big issue of principle: the advantages of privatising the water supply and sewerage industries.
We had scare stories and diversionary tactics galore—everything from turnstiles on national park walks to my alleged row with my right hon. Friend the Prime Minister; from our proposals for price control for water companies that were alleged to be leading to huge monopoly price rises, to the cost of environmental improvements that the hon. Member for Copeland (Dr. Cunningham) alleged was due to privatisation. They were all nonsense—fictitious fig leaves to disguise the real reason for opposing the Bill: which is the lingering spirit of clause 4, the Labour party's antagonism to private enterprise, the pain and despair at seeing the Socialist state not only demolished but debunked in argument.
The hon. Member for Dewsbury (Mrs. Taylor) gave the game away a fortnight ago today when I intervened to ask her, if she wanted to see a major clean-up of our rivers, why she opposed the Bill? She did not have an answer, she fumbled and could only repeat her opposition to privatisation. The Committee stage has proved that there is no reason for opposing this Bill, other than the

emotional one that somehow water is different, that it is vital to life, and is provided by the Almighty. I shall therefore spend a few minutes discussing that incontrovertible observation.
Yes, water is vital to life; but so is food, and housing and clothing, and many other things, too. Yet nobody suggests we should emulate the Russian system of collective farming and state food shops, which is the way the public sector provides for that staple of life which is food. Primitive man privatised food supplies, and so does civilised man. I will not attempt to answer for Ashdown man who has taken no part in the debates.
Nor do I recommend the Socialist clothing shops to those aspiring countrymen of ours who clearly prefer Marks and Spencer. Nor do I recommend the Socialist provision of state housing. Even the Labour party knows that people prefer home ownership. But clothing and housing are staples of life, far better provided—does anyone disagree?—by the private sector.
So what is so special about water? It is a natural monopoly, yes, but that is catered for in the regulatory arrangements that we are making. I would remind the House that it is not the water itself which we are proposing to privatise, but the impounding, piping, pumping, treatment, maintenance and billing of it—the industrial activity essential for its provision. Morever, we mortals dirty it. It has to be taken from our houses and purified, treated, pumped, piped and finally disposed of. Listening to Opposition Members, I sometimes think that they believe that it is the Tories who create sewage. I plead guilty to the fact that Tories do create 44 per cent. of it—our latest opinion poll rating—but that means that 40 per cent. is Labour, 12 per cent. Liberal/SDP and 4 per cent. do not know.

Mr. Paul Boateng: Will the Secretary of State reflect on the fact that 96 per cent. of those who took part in a recent opinion poll on water privatisation and who assist in the production of sewage were against his Government's proposals?

Mr. Ridley: I cannot accept that figure. The poll that I have quoted is the one the hon. Gentleman should bear in mind, instead of making such an unfelicitous intervention.
The fact is that 42,000 people are employed in the provision of our water and sewerage services. Unfortunately, the Almighty does not pay their wages; nor does He provide the capital for the massive increase in environmental standards which this Bill will usher in. That is why water is not free, and never can be.
The question is, how can this massive human enterprise be best motivated; and how can this large amount of other people's savings best be harnessed to the improvement works that everyone wants to see?

Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that many of us agree with him that we dislike state monopolies, which is why many of us voted for much of the privatisation that has taken place throughout this Government's period in office? If I dislike state monopolies, which in the end are controlled by the State, why should I like private monopolies that in the end are often against the public interest? What is so good about a private monopoly and what is so awful about a state monopoly, as with water where people have nowhere else to go to, as there is only one supplier?

Mr. Ridley: I do not know whether my hon. Friend supported the Government when they privatised the airports, British Telecom and British Gas——

Mr. Beaumont-Dark: Yes.

Mr. Ridley: Those are all monopolies, too.

Mr. Beaumont-Dark: They are not.

Mr. Ridley: They are. There is no way of coming to London without going to Heathrow or Gatwick, which are both under the same ownership.
These are the questions that are relevant to the Bill and which the Opposition shirk. I shall give them the answers. The whole country knows that people work more effectively if there is every opportunity for them to better themselves by better performance. In the private sector, water managers, foremen and employers will profit from success, and I hope that they will own shares which will then rise in value as these people succeed. In the private sector, capital which is borrowed from the market or from shareholders will be invested with all the efficiency and skill that those who are responsible to their shareholders have to demonstrate. Moreover, that capital will not be rationed as it is in public sector industries: it will be allocated by the market, if a water company can show a proper rate of return.
We all know what happens with capital rationing in the state sector. Under the Opposition, capital spending was cut by a third, and investment in sewerage within that by a half. That is the albatross of which the Labour party will never be able to rid itself in these debates, and it continues powerfully to make the case for privatisation.

Mr. Nigel Spearing: Talking of capital and shares, will the right hon. Gentleman confirm something with which I charged him on Second Reading and which I believe still stands? This capital will be available for diversification virtually without limitation. It will be open to the worldwide capital market, and the water companies can be controlled, bought and sold on that market without the control of the Government. Will the Minister confirm that that is true?

Mr. Ridley: I was talking about loan capital, but I presume that the hon. Gentleman is referring to equity. I very much hope that the world loan markets will be available. That will mean that we can obtain the cheapest loan money for the environmental improvements that are required.
As to shares limitations, the hon. Gentleman knows perfectly well what we have said will be the position in relation to golden shares. He also knows perfectly well what we have said will be our policy towards mergers and monopolies. That policy was discussed in Committee, and I believe it to be right.
The hon. Member for Copeland (Dr. Cunningham) said a fortnight ago:
I am willing to set out all the answers to all those questions in a speech which I shall be making in a few weeks time.
He is waiting until the debate is over before telling us his policy.
I agree that these things will cost money, and a great deal of money, and that the British people will need to pay. I also believe, that, overwhelmingly, they are willing to pay. It is not necessary to sell off the nation's water resources to achieve these objectives."—[Official Report, 21 March 1989; Vol. 149, c.969.]

I agree with the first part, but it is necessary to sell off the nation's water resources to achieve these objectives.
The truth is, as Labour proved for us when in power, that the person who regulates an industry must be separate and different from the person who provides the service—hence the National Rivers Authority, which will be able to ensure proper standards without financial penalty to itself. It provides a far more satisfactory framework for setting national standards for the industry than has even been achieved while the industry has been owned by the public sector.
The Opposition have only to look at the proposals for customer service standards and price control, and for quality of drinking water, and at the framework for setting and achieving higher standards for river and coastal water. Those standards were never set, let alone achieved, when they were in office.
As a result of the Bill, standards will, for the first time, be clear, public, objective and measurable. The industry will have no option but to comply with them, because to do otherwise can lead to fines and, in the last analysis, to loss of appointment. When compliance cannot be achieved immediately, there will be a clear and explicit understanding of the steps to be taken to achieve compliance. The Bill is the biggest step forward for the environment since the time when the Opposition were only a gleam in Keir Hardie's eye. The creation of the NRA and the privatisation of the utilities is the only way to secure the environmental improvements to water quality and to the beaches and rivers that we all want. This will be coupled with a system of price regulation which will protect the consumer from exploitation by the monopoly.

Mr. A. J. Beith: The Minister has spoken of the great price benefits for consumers of privatisation. Will he explain why the existing private statutory water companis have increased their prices by so much and attributed the increase to privatisation? Will he explain how it can be that his former hon. Friend Lord Elliott of Morpeth has told me in a letter that one of the three reasons for the 18·5 per cent. increase by the Newcastle and Gateshead water company is privatisation legislation, because it will change its financial regime from that of a statutory company to that of a plc? Surely the noble Lord is telling the truth?

Mr. Ridley: I do not accept for one moment that the reason for the increase in water companies' charges, which averages 22 per cent., is necessarily right and justified—I do not have the bill. Secondly, I am certain the increases have nothing to do with privatisation——

Mr. Beith: The companies say that they have.

Mr. Ridley: Without the powers in the Bill enabling the director general to examine the books and to set a limit on price rises, and to check that they are due to environmental improvements, how can anyone possibly say whether these prices rises were justified?
Secondly, there is no way in which the privately owned statutory water companies can be privatised, so the increases cannot be due to privatisation, whatever the noble Lord says.
Thirdly, it is true that the existing structure of control of dividends and of that which can be put to reserve has starved those private companies of equity capital and forcing them to rely far too much on loan capital. On the


basis of that analysis, they have been failing to renew their assets and get their acts right. They would inevitably have to make changes as a result of moving to a proper balance sheet structure.

Dr. John Cunningham: Does the Secretary of State recall holding up the statutory water companies as paragons of virtue on Second Reading and describing them as examples of how the water industry should be managed, operated and run? Why, now that this has all blown up in his face, are the companies overwhelmingly, if not universally, blaming the Bill for large increases in water prices? Is he calling them dishonest? What has happened?

Mr. Ridley: What the hon. Gentleman said was not true; he should consult Hansard before making those accusations. I did not hold up the companies as paragons of financial virtue. I said that they had supplied water in the private sector to 25 per cent. of the population for many decades, and the hon. Gentleman had never noticed or objected.
Secondly, I made it clear that the environmental improvements and the change in capital structures required for this massive investment would apply to all water companies as well as the water authorities. I have never disguised for one moment that the effect of the environmental improvements which the whole House wants will be an increase in prices.

Mr. Allan Roberts: Will the Secretary of State give way?

Mr. Ridley: I have just given way to the hon. Gentleman's hon. Friend, but I shall give way for the last time.

Mr. Roberts: On what environmental improvements will the statutory water companies spend such large amounts after privatisation which they are not spending money on now—bearing in mind that they will still have no responsibility for sewage?

Mr. Ridley: I cannot tell the hon. Gentleman until the Director General of Water Supplies is in place—the hon. Gentleman voted against part II, which sets up the office of director general. How can anybody know how to regulate a price if there are not the powers to obtain the necessary information?
The attitude of the hon. Gentleman is absurd. He might like to know that the Director General of Water Services, whose appointment I announced today, will do more to promote efficiency and customer interest than was ever achieved when this monopoly was in the public sector.
So why do the Opposition oppose it? That is the question which the Opposition cannot answer and I will tell them why they cannot answer it. It is because at least one half of the Labour party have painfully, unhappily, belatedly come to realise that we are right. I quote from the second leak of the Labour party's policy in The Times of yesterday:
Under proposals which will be fought by left-wing unions and politicians only British Telecom, of all the utilities privatised by the Conservatives, would be taken back into public ownership under a Labour government.
[Interruption.] Wait for it; the hon. Gentleman has a gem coming here.
Instead, the gas, water and electricity industries would be subjected to a tighter regulatory framework than at present

imposed on gas and Telecom. Plans to take permanent government stakes in strategic companies have also been shelved.
Since this Bill contains that tighter regulatory framework which they seek, the Opposition have conceded the principle both of part I and of part II of the Bill. There is nothing left for them to stand on. I rest my case there. There is no longer any reason for Labour Members to stay even until 10 o'clock. The Opposition are not going to vote against this—but I hope that my hon. Friends will stay on until 10 o'clock, just in case. I am happy to assure hon. Gentlemen that their own party policy, which I am sorry that they have not been told about, utterly supports the Bill. I therefore commend it to the House.

Dr. Cunningham: The Secretary of State began with what appeared to be a joke when he described what had been happening in the Water Bill Committee for the last four months. He is either a victim of the Minister for Water and Planning's doctoring of the reports from the Department of the Environment or he simply has not been reading the newspapers during that time. If he blissfully believes that his ministerial colleagues have won all the arguments and convinced the British public of the effectiveness of his proposals he is living in cloud-cuckooland. Judging by the remainder of his speech, that is exactly where he has been for the last four months.
The Bill has been under scrutiny in debate since last December. It remains largely unchanged—that at least is true—but our fundamental criticisms remain, and public antipathy to the proposals continues to increase. The issues have been widely reported in the media and there has been huge public interest in our discussions. The response of the public, the press and the media generally has been overwhelmingly and heavily critical of the right hon. Gentleman's Bill. The Bill remains fundamentally weak, confused and, indeed, incoherent, and the ideas that he had cobbled together fell apart during examination in Committee.
That is not surprising. The Secretary of State began by trying to hide a bad idea by claiming bogus environmental advantages for his Bill, but those bogus claims sank in a sea of his own confusion.
Let us take the right hon. Gentleman's treatment of the pollution issue as a case in point. He said in parliamentary answers that he did not hold centrally information about pollution of our beaches. He could not tell us, he said, how many sewerage works discharged untreated raw sewage into the sea. The Secretary of State for Wales told us that the information was held centrally and he could provide it. That was on 14 March. On 22 March, the Secretary of State was able to tell the House that about 14 per cent. of sewage from England and Wales was discharged into the seas untreated. Miraculously, in two weeks, this information, which he said was not held centrally, had suddenly appeared.

Mr. Ridley: rose——

Dr. Cunningham: In a moment. I am referring to the right hon. Gentleman's comments in column 1081 of the Official Report of Wednesday 22 March. The Prime Minister, in the meantime, goes on television and tells the British public that no untreated sewage is discharged into the seas around Britain.
Here we have the kind of confusion about these issues that is rampant in the Government. The Secretary of State for Wales contradicts the Secretary of State for the Environment; the Secretary of State for the Environment contradicts himself; and the Prime Minister contradicts everybody.

Mr. Ridley: The hon. Gentleman has made an awful mess of this one. The first question that he asked was how many outfalls there were in England. We do not have that information. Some of them are tiny. They do not have that information in Wales. That is the first point. When the hon. Gentleman asked a sensible question to which I had the answer—the 14 per cent.—I gave it to him immediately. He must not get mixed up between the two things.

Dr. Cunningham: The Secretary of State is further confused, because it was not I who asked the second question; it was another hon. Member. It is passing strange that the Secretary of State says that he does not know how many outfalls pass untreated sewage into the sea, but he can give a percentage figure of how much sewage goes untreated into the sea. How does he arrive at the calculation? How has he come to that conclusion?
The Secretary of State caused further confusion when he publicly abandoned his statutory duty to protect the environment by promising, on the record, that the cosseted private monopolies he wants to create would have immunity from prosecution if they polluted the water environment. The Secretary of State has tried to disguise the scale and nature of the problems by hiding the truth, as I have shown by the example I have just given. One week he cannot tell us the facts and the next week, when it suits his purpose, he has some facts.
Let us come to the issue of the land assets, which has been such a bone of contention throughout our discussions. We know that the potential development and sale of 500,000 acres of land is one of the sweeteners which the Secretary of State is pushing towards the City and purchasers. The Minister for Water and Planning made that clear in his letter of 6 February to Mr. Jack Jeffery of the statutory water companies, when he said that the water companies, after privatisation, should offset costs by "proceeds of asset sales"—in other words, by selling their land.
What is happening now, in anticipation of all this? I have here a copy of an advertisement by the Mid Southern water company explaining its reasons for increasing charges to its consumers. It says quite candidly that it had been seeking planning permission for some of its land and with such permission could have raised £1 million, which could have been used to offset price increases. Unhappily for the company—but happily for us and for the environment—planning permission was refused.
When we debated all these matters in committee we were told by the Under-Secretary and the Minister for Water and Planning on several occasions that there were some "good arguments here". The Secretary of State replied to these matters recently when he was in Thirlmere in Cumbria in the Lake district. He claimed in his statement that his proposals would protect our national heritage. A newspaper report said:
The Council for National Parks said yesterday that Mr. Ridley's measures simply did not go far enough to be effective.

While we are delighted that the water authorities will have to consult the National Parks, there is no requirement for them to take any notice whatever of what the parks say".
That is the limit of the safeguard about which the right hon. Gentleman has been boasting. The chairman of the council for the Protection of Rural England, Mr. David Astor, described the decision to leave the consultation over planning and development with private monopoly companies as "incredible". He said that it was
opening the floodgates for unprecedented abuse and distortion.
Mr. Astor was speaking about planning and land development. That is the kind of confusion that the right hon. Gentleman is causing by his proposals for selling much of the national park areas.

Mr. Boswell: Will the hon. Gentleman tell us whether the private water undertakings will be able to take no notice of planning determinations by the national park authority? Secondly, in what respect are the safeguards offered by my right hon. Friend any less effective than those currently available to control the activities of public water undertakings?

Dr. Cunningham: The very fact of passing the undertakings into private monopoly hands is enough to emphasise that point. Of course private water undertakings will not be able to ignore the decisions of planning authorities. I spend much time talking to people who manage national parks because my constituency is in such a park. If the hon. Gentleman talked to such people he would know that the pressure on national parks is huge and in some cases is overwhelming the authorities. They feel that controls and oversight should be strengthened and not weakened as proposed in the Bill.

Mr. David Ashby: Will the hon. Gentleman give way?

Dr. Cunningham: No.
Those arguments have been advanced not just by Opposition parties but by influential and well-informed organisations such as the Royal Society for the Protection of Birds, the Council for the Protection of Rural England, the National Trust, the Countryside Commission and the Ramblers Association. They all express concern similar to ours and it has all been contemptuously dismissed by Tory Members who just ploughed on and voted down amendment after amendment. All major attempts to strengthen environmental safeguards and to protect our heritage have been rejected by the Government and their supporters in Committee. Privatisation is at best irrelevant to enhanced environmental protection and at worst positively disastrous and damaging.
The Bill and Conservative intentions are a betrayal of water consumers, of every family and household in England and Wales. The Secretary of State says that consumers will be safeguarded and has been dismissive of statements by chairmen of statutory water companies. The West Kent water company was one of the first in the field with a price increase of 42 per cent. In its statement to consumers it says that half the price increase—21p in the pound—was to meet privatisation requirements.
The Eastbourne statutory water company issued a notice on 27 February. The chairman's statement said:
The year 1988 has been significant for the effect of the Government's Policy of 'Privatisation' of the Water Industry and the very considerable increase in the work load placed on our staff, together with the considerable additional burden of


employing consultants, the cost of which is having to be met by our consumers, and which is likely to continue for some time. This additional cost is responsible for at least half of the increase in our charges from 1st January, 1989 and also partially responsible for the very considerable reduction in the surplus for 1988 compared with 1987. What is depressing is that I cannot foresee any worthwhile advantage to our consumers emanating from these Government proposals.
This year those consumers face an increase of 43 per cent. in their water charges as a result, in large measure, of the Secretary of State's proposals.
The chairman of the Eastbourne statutory water company continued:
I have never disguised my opinion that Privatisation is completely unsuitable for the Water Industry and I am extremely disillusioned by the Government's disadvantageous treatment of Statutory Water Companies, particularly in preventing them achieving PLC status until well after the Water Authorities. Civil Service and Government protestations of their intention to provide 'a level playing field' are totally hypocritical. The playing field is just about as level as the North Face of the Eiger.
In December, the people running these organisations were being lauded in the Chamber as examples of the way in which the industry could and should be run.
What of Baroness Oppenheim-Barnes, a former Conservative Minister? Is she to be believed when the chairmen of statutory water companies are no longer to be believed? In a letter to me in February announcing the publication of a National Consumer Council book entitled "In the absence of competition", she said:
As you will see my Council believes that the proposed regulatory framework for both water and electricity falls short of what is actually required.
The book says:
If the consumer interest is to be protected in the water industry, some kind of national body for water consumers is essential.
We moved such an amendment in Committee but it was rejected by Ministers and Government Back Benchers. The book goes on:
The proposals appear to be so complex as to raise serious doubts as to their viability.
The National Consumer Council criticises and condemns the right hon. Gentleman's proposals. The document of his own departmental working group, a copy of which I have here and which is headed "Department of the Environment, 3 March 1989"—the report of the joint privatisation regulation group; civil servants in the Department of the Environment—shows what is happening.
Page 2 says that the aim is to provide that the private monopolies
are permitted to earn a reasonable return, the secondary duty to consumers means that lower rather than higher 'Ks' should always be set.
The secondary duty and not the primary duty is to consumers. That is what the right hon. Gentleman's civil servants area saying in private and it is quite different from what the right hon. Gentleman says in public.

Mr. Nicholas Baker: The hon. Gentleman quoted the words of Mr. C. P. G. Turner, the chairman of the Eastbourne statutory water company. From what he read out, I understood Mr. Turner to be saying that he as the chairman of a statutory water company envied privatised water authorities and wanted his company to be in that position. He seemed to be envying the private companies and that is exactly contrary

to the hon. Gentleman's point. Instead of dealing with the opinions of other people, will the hon. Gentleman tell us the position of the Labour party on this matter?

Dr. Cunningham: I will happily send the hon. Member for Dorset, North (Mr. Baker) a copy of the whole statement of the chairman of the Eastbourne water company and he can consider it for himself.
On page 3 of the internal document of the Secretary of State's Department, we read:
On the basis of these figures, a real return for water and sewerage undertakers … of the order of 8 per cent. would seem appropriate.
Ministers are preparing to guarantee private monopolies a return of 8 per cent. That contrasts starkly with what the right hon. Gentleman says about local authorities running their direct labour organisations where he recommends a rate of return of 5 per cent. So it is 5 per cent. for local authorities' direct labour organisations while he is planning to arrange for 8 per cent. for private water monopolies. This is an interesting document. It gives a very different picture of events and discussions in private in the Department from what we had in Committee. It goes on to discuss cost pass through. Cost pass through is a little water pipe, a conduit of its own, which bypasses all the controls set to protect the consumer so that the cosseted private enterprise monopoly will be able to cost pass through straight to the consumer.
What does cost pass through mean? It is a euphemism for uncontrolled price increases which consumers will be unable to avoid. That is what is going on behind the scenes. The Secretary of State may deny it, but here Is a copy of a document from his Department dated 3 March 1989 and headed: "A framework and procedures for K-setting".

The Minister for Water and Planning (Mr. Michael Howard): Why is the hon. Gentleman seeking to mislead the House? If he has studied the provisions of the Bill he ought to know that cost pass through is subject to the control of the Director General of Water Services, and that it is designed to deal only with unforeseeable matters, such as new regulatory requirements. Does., the hon. Gentleman think that the companies should he in a position to meet the new regulatory requirements or not?

Dr. Cunningham: Of course they ought to be in a position to meet them. They will have to meet them. They will have no choice. At least, that is what the European Commission believes. I am not sure that the Secretary of State believes that from what he has been saying and the way he has been behaving.
What we need to know from the Government and from the Minister for Water and Planning, who will have the opportunity to tell us when he replies to the debate, is exactly how consumers will be protected from cost pass through. There is nothing in the Bill about it. There is no statutory safeguard in the legislation to protect consumers from cost pass through. Cost pass through will be used to cover a multitude of sins to enable private monopolies to load price increases on to consumers. That is what is proposed.

Mr. Howard: I know that the hon. Gentleman could not attend the Committee frequently. Has he heard of the Director General of Water Services? If he had heard of the Director General of Water Services he would know that


the cost pass through provisions are subject to regulation by the Director General of Water Services. Will the hon. Gentleman accept that?

Dr. Cunningham: I do not accept that. It is indicative of the depths to which the Minister stoops when he is in trouble. He knows that I attended the overwhelming majority of Committee sittings. He also knows that his right hon. Friend had not got the guts to go on the Committee at all. If we are trading attendances and attention to these matters, I can tell the Minister that his right hon. Friend the Secretary of State is nowhere in that argument because he did not even go on to the Committee. If that is the kind of argument that the Minister wants to have over the Dispatch Box, he is welcome to it. There was not a single attendance at the Committee by the Secretary of State.

Mr. Howard: He was not a member.

Dr. Cunningham: That is right; he was not a member. He refused to put himself up to be cross-examined about the mess. That is the record of the Secretary of State.

Mr. Ridley: rose——

Dr. Cunningham: In view of all this, it is a pity that the Secretary of State has not departed, as I understood he was to do, from these proceedings to attend the christening of his grandson, which certainly I would have understood. His performance and that of the Minister of Water and Planning have not done much to enlighten the House or the public about this mess of legislation.

Mr. Ridley: I just wish to ask the hon. Gentleman if he would kindly reply to my hon. and learned Friend's question about whether he understood that the Director General of Water Services is enabled to deny cost pass through if he thinks that it is not justified. Will the hon. Gentleman withdraw his failure to understand the Bill, because he has got it wrong?

Dr. Cunningham: I do not withdraw anything. I do not accept that as the legislation stands, consumers will be adequately protected from cost pass through, and neither do Baroness Oppenheim-Barnes and many other people who are interested in the protection of consumers, as has been made abundantly clear over the last few weeks.
Major differences of opinion between the Government and the European Commission also remain over exemption from pollution law, water quality standards, timetables for essential investment and the scale of such investment. It is in Britain that the confused, inefficient and dogmatic Tory proposals will be rejected, if not in their Lordships' House or in the City, ultimately at elections. Obdurate Tory insistence on making water supply and sewage disposal an issue of private profit is anathema to the majority of British people.
Samuel Johnson, the 18th century satirist, had a very apt description for the Government and for Tory Back Benchers in his work, "The Vanity of Human Wishes":
How rarely reason guides the stubborn choice, rules the bold hand, or prompts the suppliant voice; How nations sink, by darling schemes oppressed.

This idea is one of the Prime Minister's darling schemes and the British people will certainly be oppressed by it. The Government will ultimately sink and these proposals will sink with them.
I have been asked about our position and a leak in The Times which was news to me and was not the matter that I have been involved in discussing. I do not believe the quoted leak in The Times. I reiterate what I have said throughout the proceedings: water is the country's largest national and natural monopoly. It is the people's most fundamental resource, on which their health and well-being depend. We in the Labour party believe that this natural resource and the assets of the water industry should be publicly owned and controlled. They should be managed openly and efficiently in the public interest, and management should be democratically accountable at regional and national level. Unlike the Tories, we do not believe that an essential resource such as water should be managed and sold for private gain. For us, public health and hygiene are not matters which can be dealt with by market forces. We know that the overwhelming majority of the British people share our values and views in this matter. That is why we will vote against the Bill.

Several hon. Members: rose——

Mr. Speaker: Order. In view of the large number of right hon. and hon. Members who wish to participate in the debate, I ask for brief contributions.

Mr. Cranley Onslow: I will do my utmost to obey your injunction, Mr. Speaker. That excuses me from saying very much about the speech made by the hon. Member for Copeland (Dr. Cunningham) except to make two points. First, in my experience in the House or in Committee, bad temper is not a substitute for good argument. Secondly, it does not appear to me to follow, although it may follow for the hon. Member for Copeland, that there must be public ownership for public control. The hon. Gentleman should think a little more about the subject before he outlines Labour party policy on such matters in future.
I support the Bill, and I believe that most of my constituents do the same. My constituents have been fortunate enough over a great many years to draw their drinking water from private suppliers and I have never had any complaints about that. Given that the much vaunted percentage increases about which we have heard so much this evening will still keep the average household's water cost to about the same as the cost of a national daily newspaper each day, keeping things in proportion, I do not believe that there will be as many complaints about costs as we have been led to believe, particularly in view of the powers to control prices in future which are rightly embodied in the Bill.
I confess that I have received complaints about the drains, as have many of my colleagues. In my constituency complaints are directed against the Thames water authority, which is not a privately owned body. That authority is currently polluting the River Wey in my constituency in a most deplorable way. The local angling association shares my view about that.
In general I have no doubt that the fight against pollution will be made easier and more effective by the Bill. The duty to fight pollution will unmistakably be present,


as will the money. The Treasury will not be able to stop that money, there will be no unseemly wrangles in the Star Chamber and the IMF will be unable to prevent the necessary investment in water quality as it did during the days of the late unlamented Labour Government. That is an important distinction which we should not cease to emphasise. The plcs will be able to raise the funds that they need and in a few years we stand the excellent chance of having many more rivers to be proud of once again. That would not have happened if the Government had not introduced this Bill.
We must never forget human frailty, and we can never forecast it. It will remain possible, under this Bill or under any other legislation, for accidents, neglect or greed to create pollution in future just as they have done in the past. That means that the powers of inspection and enforcement which will be invested in the NRA will be absolutely vital. In its use of those powers, the NRA will have the support and active co-operation of anglers throughout the country, who, after all, spend more time than anyone else on river banks and are much the best inspectors of water quality in our rivers.
I am also glad to know that the public right to prosecute will remain in law. If that right is to be used properly, the law must be effective and help the public enforce their rights in addition to enforcement by the NRA.
My hon. and learned Friend the Minister for Water and Planning felt that my amendment No. 86 to clause 143 was unnecessary. He has written to several of my hon. Friends explaining his views. In his letter he states:
The Bill as drafted already meets the requirements
which the amendment seeks to achieve because—and I do not deny this—
it will be open to anyone to bring a prosecution over the pollution of 'controlled waters' … including prosecutions for breaches of the conditions attached to consents granted by the National Rivers Authority for the discharge of trade and sewage effluent …
Second, the NRA as the body statutorily responsible for effluent discharge consents will have to use its powers under the clauses … to enter premises and sample effluent discharges in a systematic manner to ensure that the conditions of the consents are being met. Where a sample suggests that a consent requirement is being breached in a manner which could give grounds for prosecution, we would normally expect the NRA to start taking formal samples in accordance with Clause 143. But since the circumstances of each case will vary, it would be inappropriate to deny the Authority discretion as to whether this is appropriate in a particular case, and as to the number of occasions on which the taking of a formal sample is necessary. For that reason we could not support the particular amendment … But the Authority will have a clear obligation to take such number of formal samples as permits full and effective enforcement of the legislation, and the Secretary of State will have the power — to direct the Authority on how to discharge this obligation.
So far, so good. However, in my capacity as a member of the council of the Angler's Co-operative Association which has initiated several prosecutions in this area, I must say that we are by no means convinced that my hon. Friend the Minister is right.
Under the Control of Pollution Act 1974, provision was made to establish public registers of discharge analyses. The relevant section of that Act was implemented in July 1985, as my hon. Friend the Minister no doubt remembers. Since then, the Angler's Co-operative Association has used information from the registers to prosecute water authorities on three occasions. The authorities concerned were Thames and Anglian. On one of the occasions the

Thames water authority was prosecuted on eight separate charges, to which it pleaded guilty, and on each of which it was fined £1,000. The outcome of the other cases was much the same.
At the moment, the ACA would like to take a similar action against a fish farmer on the Hampshire Avon. I believe the proprietors are the Radnor estates and the farm is in the constituency of my hon. Friend the Member for Salisbury (Mr. Key). I hope I will have his support when I make this point.
The public register shows that that fish farm is at times in breach of conditions. However, the Wessex water authority declines to prosecute the polluter. The ACA cannot prosecute because the samples taken by the water authority are only for monitoring purposes. Therefore, for that purpose, the register is not worth the paper that it is written on. We cannot launch a common law action because it would be necessary to trespass to obtain formal samples.
The Government claim that the right of private individuals to prosecute will remain. However, that right must be effective. In future, samples will be taken by the NRA and their validity may be challenged. However, more to the point, the NRA may lack the will to prosecute, as has been the case with the Wessex water authority.

Mr. Robert Key: My right hon. Friend knows that for many years we have both been keen to ensure the quality of the Hampshire Avon. If we look at this question very carefully, it seems to me that under the new arrangements the vital difference is that the evidence under the formal NRA sampling exercise can be subpoenaed by a third party. In those circumstances, the Angler's Co-operative Association could undertake a private prosecution under this Bill.

Mr. Onslow: I hope that my hon. Friend the Minister can confirm that my hon. Friend is right. However, the important point is to take the samples. That is the necessary step towards a successful prosecution. My amendment sought to place a duty on the authority to take the samples.
The situation is one where the anglers have their doubts about such matters. Lawyers, no doubt, see everything with greater certainty. However, the people who will be taking the samples will be the same people as today, and there is to our minds little guarantee, given that the NRA will have a discretion, that we can necessarily rely on getting samples of quality and type necessary for a successful prosecution. Whatever view other people may take of the chances of success at law, the ACA is not in the business of frivolous litigation and goes to court only when it has the evidence which will make it possible to win and it is confident that it will win. I should be grateful if my hon. Friend would touch on that point in his reply.
The Central Council for Physical Recreation also has reservations, and I expect my hon. Friend will have seen a letter sent to his hon. Friend the Member for Lewisham, East (Mr. Moynihan) by the CCPR on 22 March about the code of practice. Without going into that at length, I hope that my hon. Friend will be able to give the House some assurance on how the Secretary of State intends to ensure that water undertakers comply with the code of practice and the maintenance of existing recreations, which some people fear may be at risk. Of course, if we cannot get assurances tonight because of lack of time, there will be an


opportunity to return to these matters in another place, and perhaps then the Government will explain why they found my amendment No. 80 so unattractive the other night.
I find it difficult to believe that the NRA does not want to be responsive or flexible and is not prepared to have the opportunity to delegate some of its powers, and I find it odd that there should be resistance to this from the Department without our necessarily being told what the view of the NRA is. In this legislation we are creating an important body, and we should spell out the duties we expect it to perform in this area, and on the question of abstraction, which also causes concern.
I am anxious, as I said, to be brief, and I have little more to say except to question the realism of the statements made by the hon. Member for Copeland about the assets of the water authorities and the extent to which they might be turned to private profit. I do not believe there is a prospect of mass asset-stripping or great areas of land being sold at a profit. However, I believe there is one asset nobody has so far identified which is capable of being exploited and which we should all wish to see exploited, and that is the physical access this industry enjoys to every property which it serves. That access does not, it seems to me, have to be used either to pipe water in or to pipe sewage out.
There is little doubt in my mind that an asset of that kind could be used in other ways of profit and value to the community. It is not impossible that it could be used in such a way as to provide competition in information business technology with British Telecom, and I think we might very well see new owners, enterprising people, taking an opportunity which has been available to our own companies for far too long without being noticed—though I suspect the French have noticed it. I hope entrepreneurs in our own country will take it up and that it will be used to the value of the customers of the water industry.
I have no doubt that this is a necessary Bill, and I believe that it should have the support of the House and of the country.

Mr. Livsey: The Water Bill is the ultimate folly of a Government hell-bent on imposing their dogmatic will on a long-suffering British public. The time has long since passed when we can appeal with any sense of reason to members of the Government, whose misuse of their parliamentary majority is now virtually complete.
What does this Bill do? Part II replaces the 10 public monopolies in England and Wales with 10 private monopolies, the plcs, and they will indeed be ring-fenced in their own areas; in part I of the Bill a National Rivers Authority will be created, which will remain in the public sector. That is the basis of the Bill. The water so essential for life itself will not remain a public utility, even though the Government's Victorian predecessors thought that was right. Indeed, it was the Government's predecessors in my party who put the water industry into the public sector in the first place. Water, indeed, is essential for life itself, which makes it a natural public utility, yet it is not to remain a public utility.

Mr. John Marshall: The hon. Gentleman implies that public ownership of water is

necessary for the health of the nation and many other factors. Can he explain how people in other countries survive and prosper with private sector water?

Mr. Livsey: Taking the example of France, the price of water is four times higher in some parts of France than in others, and I cannot see that the people there entirely benefit from that situation.
Of course, the reasons why water should clearly remain in the public sector involve the health and social conditions of the people of this country. They should have clean, wholesome and affordable drinking water. Surely these are the basic objectives. The only tenable fallback position, if one could justify it, is the model of the current statutory water companies which presently operate in 25 per cent. of the water industry. They are closely controlled in the public interest and produce affordable water through ploughing back profits to help keep consumers' bills down.

Mr. Ashby: rose——

Mr. Livsey: However, the Government have chosen to dismember them and to turn them into plcs instead, already with pre-privatisation increases of 30 to 50 per cent. in the price of water.
The environmental impact of privatisation will affect clean drinking water standards, the disposal of sewage, the cleanliness of beaches and continued access to the half million acres which the present water authorities own.
The Government's reasons for privatising water seem to rest on the following ideological formula. They say that the NRA will control pollution and improve standards; that private investment will bring more money into the industry to clean up drinking water and sewage disposal; that the industry will be freed; that more people will own shares; that the City wishes to invest in the industry, and that the industry will be better regulated.
The facts are that the NRA could be involved just as well as an environmental protection agency if water remained in the public sector. The problem is that the NRA will be under-funded. Indeed, a privatised water industry will only be attractive to the City and to investors if it is made financially attractive, and the only way of doing that is to make consumers pay more for their water than if the industry remained in the public sector. The soundest estimates indicate the price of water will double by 1992.
The other part of the equation is that valuable public assets, such as land, will have to be sold and access charged for. The taxpayer and the consumer will, of course, pay for this. Even if this is done, the City is unlikely to find water an attractive investment, because up to £6 billion will be required to clean up the industry; the maximum sale price is unlikely to be more than £10 billion, so what kind of deal is that for the City? The argument that the industry will be freed by disposing of its debt could equally apply if the water authorities' debts were written off now while the industry remained in the public sector. Our water bills would be a lot cheaper if that were done.
A Director General of Water Services, for regulation purposes, could just as easily have been installed if the industry remained in the public sector, so that argument is demolished too. The thesis that more people will own shares does not reflect recent experience, where it has been shown that most shares still tend to end up in the hands of relatively few people.
The Government have turned water privatisation on its head. They have decided, come what may, to privatise water and have then dug up convenient reasons to try to justify the unjustifiable.

Mr. Nicholas Baker: The hon. Gentleman made the interesting point that it was not necessary to privatise the water companies and he implied that it was perfectly possible for NRA to police water authorities maintained in the public sector. Has that proposition any basis in fact? Can the hon. Gentleman name any other area in our society where public bodies can adequately police each other? Is it not a fact that such bodies in the public sector get together cosily and the customer suffers in the end?

Mr. Livsey: The present pollution inspectorate of the water industry would fill the niche that the hon. Gentleman is describing.
The Secretary of State for Wales has said that he would like to see Welsh people owning Welsh Water shares. We would like to see that too. However, there is no sign that that will happen. On 21 March a grand three-helicopter tour of Wales was undertaken by representatives of such well-known Welsh banking forms as Smith Newcourt, Kleinwort Benson, Salamon Brothers, Alexander Lang and Scrimgeour, Cazenove and Company, Citicorp, County NatWest, Shrive Lehman and Company, Phillips and Drew and, just to sweeten the pill, the Cardiff stockbroking firm of Lyddon and Company.
Given the Secretary of State's penchant for public relations, it is strange that such an exercise by Welsh Water was not the subject of headlines in the Welsh media. Perhaps the subject was just a little too sensitive at that time since the Bill was being debated in the House at that moment. I hope that the bankers enjoyed the scenery—97,000 acres represents quite a lot of Wales and quite a lot of Welsh real estate. We know, too, that computers in Scottish banks are already programmed to print Water plc shares. What kind of pre-emption is that? The Bill has not yet completed its progress through the House.
The Government want the Bill to be a truimph of dogma over common sense. We know that water will become unaffordable for many of the poorest in society after privatisation. There is no way that the Government can deny that. There were 9,000 disconnections last year and there will surely be more in the future.
According to the opinion polls, water privatisation is opposed by 75 per cent. or more of the British people, including many Conservative supporters. Make no mistake about it, water privatisation will damage our health. Water privatisation will annexe public assets and give the taxpayers' investment to the wealthy. It will produce a private monopoly with no competition—inexcusable even by Tory standards.
Water privatisation will damage the environment and double the price of consumers' water, hitting the poorest in society. It will cost £842 million just to privatise water and the British people will pay that bill. It will be a poor investment because of its liabilities. Water privatisation will remove the last vestiges of local government democratic representation in the water industry. There will be no public accountability.
Water privatisation is a rotten measure by a Government who have gone several privatisations too far.

They will surely pay the political price in the ballot box. God gave the water to the people and the Government are taking it away from them.

Sir Giles Shaw: I do not want to follow the example of the Eisteddfod contribution of the hon. Member for Brecon and Radnor (Mr. Livsey), but I am prepared to tell my hon. and learned Friend the Minister for Water and Planning that I support the Bill and I have five reasons for doing so.
First, I must pay tribute to the history of the water industry through its many years of municipal undertaking. That is a proud heritage for those of us who represent northern seats where the fine reservoirs produced on the back of the woollen industry are still some of the greatest architectrural achievements of the 19th century. Municipal leadership was a fine contributor to the effectiveness of the British water industry for the first 50 or so years of this century.
There has been a dramatic change, because local authorities and local government have changed. The disappearance of the many utilities in favour of the mega-utilities and local government reorganisation made a fundamental difference to the municipal contact between water supply and the authorities. With that came high-pressure politics of a different kind and a substantial period of neglect for the water utilities. Water had to take its place among municipal priorities, and it was a pretty lowly place as one sees from the total neglect of the reassessment and renewal of assets.
With the development of local government reorganisation came the reorganisation of the water authorities as we have them today. I confess that I remain firmly of the view that the scale of the water authorities as presently constituted is a perfectly effective way of managing water resources. They have the geographical spread to enable the supplies to be most effectively managed. They measure the water cycle as their base. They provide services way beyond the reach of a local authority, even a large one. It is no use in Yorkshire looking back to municipalising the water industry on the basis of the three-county structure and the fourth county of Humberside and a little bit of Cleveland—all of which are within the catchment of the Yorkshire water authority. Municipalisation is not available as an alternative for discussion in the House, although it has played a major part in the handling of the water industry.
Water authorities are within the responsibility of the Department of the Environment, and the Secretary of State has powers to determine their capital allowances, pricing policies and most of the strategies and priorities that the individual authorities would wish to adopt. But we must never forget that they are 10 very different authorities. They are different geographically. They have different resource problems and resource management. They have a different pattern of demand and very different problems of foul water and sewage treatment. They have different demands and patterns of drainage.
That means that they inevitably have different capital demands. They have different priorities and rates of development. All depend on the whim of Government: expenditure and Government control. It is that single fact which brings me to my first reason for believing that the


Bill is right. Until the authorities get outwith the control of Government, they will not be able to manage and develop their assets on a long-term basis without intervention.
The case can be made for central control. In replying to an earlier debate, the hon. Member for Bootle (Mr. Roberts) made it clear that the next Labour Government would take the authorities back into what he loosely termed social ownership public control. But the case for bringing them back into public control by the Government is even thinner than that for going back to municipal control. Surely the water industry must now be recognised for what it is—a modern, effective, well-managed range of public utilities. It is a capital-intensive industry, operating scientifically controlled systems for the distribution of pure water, with a complicated computerised system for cleansing foul water by biological and chemical processes. In addition, it has a high standard of efficiency.
When one thinks that the water industry has had to contend with a rapid growth in demand not only from the ownership of houses and of the developments that that brings but from changes in industrial technologies that require huge uses of water, one would have to be remarkably complacent to argue that the water industry has sold the country short. It has not. It has managed to keep pace with domestic demand created by the washing machine, the car wash, and all the other demands made on the public water supply by domestic consumption, for a daily cost that currently averages 29p to 30p per household, not per person. For that cost to be regarded in 1989 as a significant impost for an amenity that, as the hon. Member for Brecon and Radnor was so keen to argue, is essential, irreplaceable and God-given, is absurd. A cost of lop per day for each individual is far from high. No one can deny that the water industry has made that possible by its policy of developing new technologies and new effort.
The major argument for privatisation is that it will allow a major service industry that has long outlived its municipal founders and has outgrown its need for central Government constraints to take its place in the private sector. That is the main reason for the Bill, and it is why the Bill deserves, and will have, my support. I do not believe that the statutory water company is a relevant model to the scale of the water authorities, their regional basis, and the range of services that they currently provide. They are not a model for what a locally based statutory company can do. It must differ radically in its management skills and experience, and in the range of the assets that it can produce.

Mr. Nicholas Baker: My hon. Friend refers to the great record of water authorities in coping with increased demand arising from developments in certain parts of the country. Does he agree that a connection charge, which is now subject to discussion, would benefit privatised water companies in providing a good service to the consumer and ensure equity between existing consumers and the developers of new housing estates, which would be highly desirable and a fair innovation?

Sir Giles Shaw: I entirely support my hon. Friend. I was glad to note that in a recent speech my hon. and learned Friend the Minister for Water and Planning said that he was still looking for a way of putting such a provision into

the Bill. I wish him well. I hope that he will not be put off by the fact that it will be difficult and that officials say that it is impossible. Good political leadership of the kind that I am sure my hon. and learned Friend can provide should see such a measure put in the Bill.
The second reason for privatisation is that it will allow the regional quality of water authorities to develop when they become plcs, providing an important opportunity for regionalisation to take a lead. The regions have their different needs and priorities, and I welcome the prospect of strong regional shareholdings in the regional plcs. I should like to see not only preferential treatment given in the flotation plans to employees and customers, as I am sure is my hon. and learned Friend's view, but a proportion of the stock made available only to regional investing markets, such as Birmingham, Newcastle and Leeds, so that we may ensure that there will be a placement of stock to the benefit of local institutions and companies. Until now, far too little attention has been paid in privatisation to the regional markets. We are presented with a classic opportunity to put that right.

Mr. Simon Hughes: The hon. Gentleman ignores the fact that proper representation of regional interests currently exists but with the Bill as it stands the probability is that, in future, the regions well represented will be foreign and not British. Is that not a valid criticism, and one which argues in favour of the current arrangement being retained?

Sir Giles Shaw: The hon. Gentleman will understand that there is a golden share, which is designed to prevent the development that he mentions. However, I agree with him in principle. I am not one who believes that the Battle of Britain was won on the motto "Per ardua ad Perrier". We should do what we can, by strengthening regional shareholdings, for example, to make it very difficult for French investors to obtain shareholdings in this country.
Ten separate regional businesses will be established, offering a unique and imaginative opportunity that I trust the Government will prosecute vigorously, so ensuring that at least one aspect of water privatisation will have much more public acceptability than at present.
The third reason for privatisation is that it will allow British water management and technology to compete across the world. It is an amazingly large market. In my brief time at the Department of the Environment, I took the first British water mission overseas. We went to the French Cameroons.

Mr. Robin Maxwell-Hyslop: And drank the water there?

Sir Giles Shaw: I recall that the president resigned the first day that I was there.
The French Cameroons desperately needed new technology, because its cities failed to comprehend that most of their population lived below the water level. The overseas market for British technology can be released only after the industry's privatisation. That is exactly what should be done. If we accept EC standards, as we are required to do, it should be recognised that our water industry has developed against a history of fast-flowing rivers for the transportation of drinking water as well as for the disposal of sewage and of foul water. The way in


which continental standards are to be applied seems to ignore our particular aquatic advantages, which we seek to retain.
The fourth reason for privatisation is that it fits extremely well into the Government's policies for its third term of office. Our first term was dedicated to containing inflation, restoring sensible economic policies, and releasing industry and commerce so that it could expand on the basis of competitive quality and price. Managements were given the power to manage, and unions were made accountable to their own members. In our second term, we took great advantage of the public sector by returning it to the private sector, and in industry and in housing there was a massive increase in capital ownership. We have substantially spread the benefits of ownership, and with that has come a greatly reduced demand for tax revenue. Now is the time, in the Government's third term, to tackle major social issues such as health, education, social provision and the environment.
The Government's environmental policies are epitomised by the Water Bill. Only now can we afford evironmental policies of that kind. The environment is one of the most expensive areas in which to legislate and in which to create change. The water environment in particular requires the massive release of resources and an unshackling from the controls that have been applied at a municipal or central Government level in the past. There will be changes in respect of conservation, access and sporting uses, and there will have to be better provision and more flexible policies.
There will undoubtedly be increased costs, in terms not only of the investment that is still required but of ensuring higher standards of river quality, drinking water quality, and of amenities. At a current daily cost of 29p to 30p per household, we are not paying enough for the range of services that we enjoy. I shall be very happy to see increases in water charges, if they bring with them the scale of benefits that. I am sure that a new and environmentally sensitive policy will bring.
For something that is as important as water, we should be asking how its price per head compares with the other amenities that the British consumer enjoys. Is 10p per head per day enough? Is that a reasonable price to pay for four or five gallons of water per head? Should it be 12p or 15p? In relation to the cost of other amenities that the consumer currently enjoys, water is excessively cheap. [HON. MEMBERS: "Oh!"] Hon. Gentlemen may roar, and they are entitled to do that, but there is no doubt that water in this country is cheap and that we are perfectly entitled to say that, given the controls being placed on price by the National Rivers Authority and the director general, some increases will be essential and that we should not try to destroy those increases when they are proposed.
My fifth and final reason is that this has been a commitment that the Government have undertaken for a considerable time. We made it an election commitment the last time we went to the country. It is something which has been worked on for a long time. I am confident that now is the right time to proceed. But if we have confidence in the Bill, I am bound to say that we look to the Government for a further demonstration of their own confidence in the industry.
For example, I am not satisfied with merely a 51 per cent. hold on water privatisation. Why cannot it be 100 per

cent., particularly as we now have provision for golden shares and so on? Why cannot 100 per cent. of the water equity be made available? Why confine it to 51 per cent.?
We must also ensure that in the way in which the National Rivers Authority and the director general control the private sector water companies there is a fair relationship between the two. I hope very much that the NRA will not be a large, central, bureaucratic body but will break down into regional authorities and that this regional representation will have a much closer link with the water plcs than is perhaps envisaged in the Bill. If that comes about, as we look to water privatisation being fulfilled, there will be a genuine meeting in the regions between the controllers and companies to see that both get a fair share of the hearing that is necessary before controls are implemented to the disadvantage of either.
All in all, water privatisation is a sensible measure. The Bill is a sensible way of taking it, and I wish it well.

Several Hon. Members: rose——

Mr. Deputy Speaker (Mr. Harold Walker): Order. I remind the House that Mr. Speaker has appealed for brief speeches.

Mr. Tom Pendry: I will adhere to Mr. Speaker's request for brevity. As one who represents a north-west constituency and is sponsored by the National Union of Public Employees, which has many thousands of members employed in the water industry, I share the view of my hon. Friend the Member for Copeland (Dr. Cunningham) that the Bill ensures that the people have to pay a high price for Tory dogma, because the Bill is part of an ideological crusade and has nothing whatever to do with water quality or efficiency.
After all, this labour-intensive industry has a pretty good productivity record. Productivity has risen by over 33 per cent. in the past decade, yet the cost to the consumer is, on average, six times cheaper than in West Germany and four times cheaper than in France.
Unlike the Member for Pudsey (Sir G. Shaw) I take great pride in the fact that we produce cheaper water. I hope that the Pudsey Times will pick up that bit of his speech to make it clear that he is in favour of higher prices for water. The water industry even exceeded the target rate of return on assets set by the Government last year by a factor of one third.
This is, therefore, an efficient industry, staffed by workers who care for it. So why must the Government meddle with it, force prices up, reduce pollution safeguards and introduce diseconomies of scale by more than doubling the number of water and sewerage authorities? On top of this is the attack on the workers in the industry themselves. I give one clear example—and I hope that the Minister of State is listening.
I was given an assurance in a written answer from the Under Secretary of State that workers would have the right to a pension scheme with the same benefits and contributions as at present. The Under-Secretary of State said:
existing employees will have the right to remain in a pension scheme with the same benefits, and requiring the same contributions, as the Local Government Superannuation Scheme, of which they are members. Any provisions necessary to secure this position will be included in the legislation to privatise the water authorities."—[Official Report, 16 November 1987; Vol. 122, c. 417.]


What do we find in the Bill? Water employees will be able either to keep their existing pension scheme when they move into a new private company or join a new and so-called "improved" scheme. The catch is that the old scheme will have its index-linked benefit removed and the new scheme will not replace it. For the Government to have refused to guarantee the pension benefits accumulated over decades by NUPE and other members is a disgrace. The Minister clearly misled me, the House and, more important, thousands of workers in the industry with that reply in November 1987. Perhaps the Minister, who is now looking to his officials, will tell us why he misled us all on that occasion.
It is clear what sort of water industry we shall be faced with, should this Bill be enacted. It will be one that skimps and muddles through at the expense, not only of consumers, but of water workers as well, because it is clear that the £250 million saved from index-linking will be used to sweeten privatisation.
The changes will be worst of all in the area that some of my colleagues and I represent in the north-west. My region has not only the oldest and most decrepit infrastructure in the country but by far the largest landholding. My constituents will doubly lose out, from a lack of investment and a loss of open land. Of the 150,000 acres of water company land, a substantial proportion is in or next to my own constituency. New, profit-motivated water companies will be under pressure to dispose of land which is declared non-operational. I have no doubt that as soon as water is privatised we shall see vast tracts of unspoilt land declared non-operational and sold for a large profit, a profit which will not be passed on to our constituents by way of cheaper water bills.
The Government claim that recreation will be safeguarded in this Bill, not least by the National Rivers Authority. This is the same National Rivers Authority that the Secretary of State has said should employ as few people as possible. How on earth can a small body with its hands tied keep tabs on pollution discharges, on water quality and on recreational use throughout the country?
It is not, perhaps, surprising that the Under-Secretary of State, the hon. Member for Lewisham, East (Mr. Moynihan) is connected with the Bill. After all, he is doing his level best to demolish our national sport of soccer with his ridiculous Football Spectators Bill. As has already been stated in Committee, I would not be surprised, if he has his way, to see turnstiles installed on country walks, cliffs fenced off for use by climbers with ID cards and reservoirs surrounded by barbed wire to stop people fishing. He really ought to listen to his former friends at the Central Council for Physical Recreation. They are particularly worried that their demands for statutory safeguards for recreation have been ignored, particularly in regard to the fate of the 190 reservoirs used for fishing and water sports. The Minister responsible for sport should be ashamed that he was unable to persuade his unsporting boss or bosses of the merits of the CCPR case.
The other place, however, may well come to our rescue, not for the first time, to stop this potentially damaging Bill becoming law. I believe that there is a case to be heard as to whether this Bill is hybrid. I hope that the Government will give considerable thought to that possibility, as will, I am sure, the House of Lords.
My own council of Tameside is investigating a possible loophole in the Bill. My authority has certain historic rights through the ownership of the lordship of the manor of Mottram in Longdendale, an area containing much water authority land. The ownership of this manor and its rights can be traced back to Henry VIII; the rights, which were reserved indefinitely in 1922, include fishing, grazing, wood collection and even turf cutting on the land. These historic rights, bequeathed to the people of the aera, surely cannot be usurped by a private water company. The land was originally removed from a Sir William Stanley, a knight of the area, who was found guilty of high treason. As one who does not believe in capital punishment, I would draw back from suggesting that the Secretary of State and his Ministers should encounter the same fate as Sir William for their part in this treasonable Bill, but they should and will get their come-uppance from the electorate. The Prime Minister, judging from her public utterances on the way in which this measure has been promoted by her Ministers, is only too well aware of that probability.
The Bill will continue to be opposed by Opposition Members as the dangerous, damaging nonsense that it is. More importantly, as every poll shows, it will be opposed by the millions of our electors who believe that water is essential to life itself and must remain a public service.

Mr. Beaumont-Dark: This Bill is the most recent in a long line of privatisation measures. I agree with privatisation as a philosophy. I think that it is nonsense for the state to own assets for the sake of owning them. That becomes an ideology only when the assets can be sold and used for better purposes. Privatisation of, for instance, British Airways, British Telecom and the Trustee Savings Bank—and in due course, I hope, British Rail and British Coal—is, in my view, acceptable and fair. The sensible criterion applied to all our privatisations so far has been the existence of another source of supply—the existence of competition—and clearly competition will exist following the privatisations of British Coal and British Rail.
I did not understand the Minister—I often do not understand him, although I am sure that that is my loss—when he said that British Gas was a monopoly. Heating can be provided by oil, electricity or even Calor gas. The reason why I have voted for privatisation until now is that I dislike state monopolies, quite apart from not liking the state to tell anyone what he should or should not do. If I dislike state monopolies because they stand astride people's lives, I dislike private monopolies even more. Private sector involvement helps efficiency where there is competition, because a private person needs to make a profit to make investment in the service worth while.
Ministers speak of erecting walls. In the City, Chinese walls were proposed. I do not doubt Ministers' good faith, but private companies will attempt to climb such walls and even to demolish them, and in the main they will succeed. That is the spirit of the animal of free enterprise, and there is nothing wrong with it when competition is there to hold it in check.
With respect to the hon. Member for Brecon and Radnor (Mr. Livsey), it is not a good argument to say that water comes from Heaven. Unfortunately it does, usually on bank holidays, but that is not an argument for it remaining in the public domain. Water, as we all know,


must be treated, and it costs hundreds of millions of pounds before it reaches our tanks. If state monopolies are to be feared, I tremble before private monopolies. That is why I believe that the Government are wrong, although I have supported them on every privatisation issue until now.
Let me say in all seriousness that the water in Birmingham is not the Government's to sell. Back in the mid-1800s, Joe Chamberlain borrowed tens of millions of pounds because Birmingham's water was foetid, as was most water. By 1850 Birmingham had more direct sewerage and cleaner water than that great empire of the sun in Japan has today. Birmingham's ratepayers were put in hock so that the people could have good water. All the water that we have—in the Elan valley, and everywhere else in Wales—was paid for out of Birmingham ratepayers' money, freely negotiated.
I was chairman of finance when we were discussing what we would do when the Severn-Trent water authority was set up. It was agreed that we would go along with it, but that it would remain under local government control. Now, however, that agreement has been swept aside unilaterally, because we all know that Governments can do what they——

Mr. Ashby: Has my hon. Friend compared the colour of Birmingham's water with that of the water in, for example, London? Has he observed that the water in Birmingham is brown, and has been for about 120 years? That water is in the public sector. Is not the reason the lack of necessary investment over the years, and is that not why this Bill is such a good Bill? Has my hon. Friend not considered the people of Birmingham?

Mr. Beaumont-Dark: With the greatest respect, the only reason that I can think of for my hon. Friend's argument that Birmingham's water is brown is that he puts too much whisky in his water. It is patent nonsense. My hon. Friend may get away with conning juries, but he could not get away with conning the people of Birmingham in that way.
We agreed that, as long as it remained under proper control, we would go into the Severn-Trent. Now we are going to sell it off because the Government insist. Quite rightly, if they can get Bills through the House, Governments can do what they will. We feel, however, that much of the money invested at the expense of Birmingham ratepayers needs to be spent to combat some of the problems experienced by Birmingham, as by other cities. If the Government wish to be honest to people, they should recognise that—if cost inflation is taken into account—Birmingham is being robbed of over £500 million of ratepayers' money. That is an incontrovertible fact. This concern is not the Government's to sell. If they insist in bludgeoning such a Bill through the House, they should at least be honourable enough—as I know that they will be in the end—to ensure that Birmingham people at least get back what they invested.
I believe that the Bill is fundamentally flawed. It will be not only flawed but dishonoured if, having broken unilaterally an agreement reached in fairness, we proceed in this way. If the Birmingham ratepayers, who looked after Birmingham's people properly for more than 140 years, find that what we did in honour has been dishonoured by a subsequent Government, I do not think that they will understand—and nor will anyone else who appreciates the ethics of business.

8 pm

Mr. Gareth Wardell: This House is known throughout the world as the mother of parliaments. As Members, we cherish the example and traditions of our democracy that for centuries Britain has spread throughout the world. Yet today we are debating a Bill which is opposed by at least three quarters of the people of this country.
The polls show that at least three out of every four people oppose this sell-off of water, and nothing that the Government have said, from the time the proposals contained in the measure were first announced, has changed the public's position over the unsoundness of the step that is now being taken.
If the Government had any concern for the wishes of the people, the Bill would have been abandoned long ago. Instead, as the hon. Member for Brecon and Radnor (Mr. Livsey) pointed out, complacent in their majority in the House, they have chosen to abandon their responsibility for large sectors of public health and environmental protection inherent in the water industry.
Increasing water pollution in Britain is one of the major concerns of those of us who care about our environment and that of future generations. It is one of those few areas of environmental concern where we can, as a nation, clean up our own backyard without reference to, or co-operation with, other countries. Yet despite their professed concern, the Government have chosen to wash their hands of the responsibility for halting and reducing the gross pollution of our rivers and seas.
No matter how much the Government wriggle and postulate about public spending 15 or 20 years ago, it is a fact that, when the Government introduced external financial limits on the water industry in 1981 and subsequently, they deprived water authorities of the wherewithal to invest adequately in schemes to cope with the pressures of pollution of rivers and seas.
Britain's rivers, the first in the world to be polluted by effluent from sprawling towns and industries during the industrial revolution, governed only by laissez-faire light-handedness, were the first to be cleaned up by public spending and investment. Now they are being fouled again at an unprecedented rate.
About one tenth of our rivers have degenerated to class 3 and 4, being polluted or unable to sustain marine life. The number of cases of river pollution in England and Wales increased last year to 23,000, nearly double the 1982 figure. Obviously, when one third of the nation's drinking water is extracted from those rivers, there is an increased risk to public health, either from the water or from the additives that are put into it to make it safe to drink. Obviously, there is a danger to fish stocks and marine life. Obviously, our environmental heritage and facilities for water-based recreations are being limited.
The Government have responded by increasingly limiting the amount that local authorities can spend to deal with the problem. The Government have reduced their pollution inspectorate, cut funds and opportunities for research and failed to legislate to ensure that polluters pay for their actions.
Now that the EEC has stepped in and said that they must find £1·6 billion to obtain minimum standards of pollution control, the Government have designed a way of selling off that responsibility. The Government can find


£10 billion to repay some of the national debt. They cannot—no, they will not—find £1·6 billion of investment to halt the decline in water quality that they have overseen.
This sell-off of responsibility will be subsidised by all of us. An industry independently valued at £27 billion will be disposed of for between £5 billion and £7 billion. What a gesture. How sweet it must be to operate on such a grand scale. On our behalf, a £20 billion discount is being given—that on behalf of 75 per cent. of the electorate who oppose it.
It is a pity that the grand scale obscures little, nitty-gritty problems that are inherent in the Bill and that would cost little to put right. They would certainly not cost billions of pounds. I refer, for example, to unadopted and unadoptable sewers.
Because the water authority criteria for adopting sewers, laid down in 1974, were allowed to differ from building regulation requirements; because developers were quick to maximise profit and slow to improve standards; and because local authorities were not empowered to enforce section 18 agreements on developers in planning permissions, hundreds of thousands of householders are left today with sewers serving their properties which are not, and which can never be, adopted, for example because pipes are too small or because they cross private land. Those householders face increasing costs to repair and maintain those sewers.
The Government were set for a blanket adoption of those sewers in the Bill, but they changed their mind. Now they appear to be saying that householders should have known about the problem and that, if they did not, their solicitor was negligent in not informing them. I gather that I should now advise my constituents—2,500 of them in one district authority alone in the area—that they should sue their solicitor. It promises to be interesting.
But the Government, set on their grand sell-off, have their mind on higher things. One is the NRA, which the Government claim is their passport to the greatness of the greens. The Government have established the NRA to monitor river and coastal pollution. It is ironic that they should have established it at a time when they will not have to provide the money to run it.
We are told that the NRA will monitor pollution and ensure that the polluter pays. I fail to see how that will be brought about. The legal maximum penalties for polluters, such as industry and farmers, are inadequate to the point of ridicule. Water authorities are virtually exempt from prosecution. Yet one in five of Britain's sewage works is breaking the law by discharging sub-standard waste into rivers. Untreated sewage leaks into rivers from 5,000 recorded sites. Storm overflows are exempt from all controls, yet in periods of heavy rainfall they deposit tons of untreated waste and sewage into seas and rivers.
The Bill allows water plcs to maintain indefinitely their privilege of non-prosecution. Water authorities do not prosecute themselves. Once the Bill becomes law, the NRA will not be able to prosecute. The Government say that the water industry pollutes too often and on such a large scale that it would be unreasonable to expect it to stop. So much for the powers of the NRA. The NRA will be unable to do anything, other than complain, about this form of pollution.
It is reasonable for the public to expect that, when shareholders grab control of the water industry—when water charges increase to make up for the lack of past investment—those shareholders should have definite responsibilities for ending this scale of pollution.
I am cynical about this whole Bill. My cynicism derives from many many factors, but I will mention just one. For many years after the issue of the EC directive on bathing waters in 1976, the Department of the Environment defined a bathing beach in such a way that, in Wales for example, there was not a single bathing beach to which that directive could apply. My cynicism continues. Responsibility, as opposed to ideology, is not prominent in the Government's vocabulary, but it is understood that responsibility—or lack of it—is what this Bill is about. That is why three in four people oppose it. That is why we call on the Government, even now, to abandon these proposals and to allow common sense and the public interest to prevail.

Mr. Robin Maxwell-Hyslop: At the last election I declared my opposition to proposals to nationalise—and I mean nationalise—the water and sewage disposal industry. We have heard a lot about privatisation, but it may be that some of my hon. Friends do not realise that this is the largest nationalisation measure that any Conservative Government will ever have passed.
When the question of privatising water was first mooted several years ago, I kept pointing out in the House that, unlike any of the other industries that were to be privatised—industries whose equity was vested in Ministers of the Crown—this one was not owned by the Government. This Bill, first of all, nationalises the entire water and sewage disposal industry, so all my colleagues who vote for the Third Reading tonight will be voting for the largest nationalisation measure ever offered to the House by any Conservative Government—and it is well that they should realise that. I certainly shall not be voting for it.
Privatisation only follows prior nationalisation under this measure. When I say that, it is not vested in any Minister. As has been pointed out already, in the representative case it was paid for in the first place by local authorities, or by combinations of local authorities, which raised the money by means of loans, and serviced those loans and repaid them by charges on the ratepayers—not just on the users of water and sewers. That was when the systems were owned by local authorities.
Of course, it is not true, as some facile hon. Members would have us believe, that water is in free supply—it most certainly is not. The cost of impounding it, the cost of pumping it, the cost of the distribution system, the cost of renewing old, inadequate and rotten distribution and sewerage systems, are immense, so a lot of investment is required to replace the rotten water supply systems and the inadequate and rotten sewerage systems. But we do not have to have this Bill in order to get the external financing limits that are necessary to do that. We do not have to have this Bill, lock, stock and barrel, in order to have a National Rivers Authority, with its functions; we could perfectly easily have had a Bill separating the functions of policing and inspection from the functions of supply and


distribution. That arrangement would most certainly have had me in the Division Lobby voting for it. It would have been an entirely sensible thing to do.
The greatest single benign characteristic of the Water Act 1973 was that it brought together the supply of water and the disposal of water after it had been used. The previous absurdity was that some authorities poured effluent, more or less—very often less, rather than more—purified, into rivers, and lower down the system other authorities extracted the water in order to supply it as allegedly fresh water. Of course it made sense to amalgamate those two functions. Unfortunately, what the 1973 Act did was make the poacher and the gamekeeper the same person—and that arrangement has never worked.
Anyone who lived through the torment of the pollution of the fresh water supply in north Cornwall, for instance, will know what I mean. I do not believe that the South West water authority prosecuted itself, although, quite rightly, it prosecutes others for polluting the public water supply. The NRA, if it is to be other than a laughing stock, will have to have ministerial sanction—not only sanction, but encouragement—to prosecute the water and sewerage authorities if they do not reach the necessary standards of purity. But how separate will the gamekeeper be from the poacher? In many areas the gamekeeper will not have his own laboratory for testing the water supply and the effluent, and will have to use the poacher's laboratory.

Mr. Boateng: We should have had the hon. Member on the Committee.

Mr. Maxwell-Hyslop: If I had been on the Committee the Bill might not have come out of it quite so quickly.
Of course those functions are different. I would not wish to say that water companies will set out to supply polluted water. Of course they will not, because, unlike the present system—under which, if the authority is sued, it is the consumers who pay—if a private owner is sued, it is the shareholders who will suffer. That is certainly benign.
I could have been persuaded to support this measure if all the revenue, all the receipts from the sale of these assets, were to be recycled into defraying the cost of meeting the purification standards for water and sewerage effluent, of cleaning up our beaches and of replacing the hundreds of thousands of miles of rotten water-pipes and sewerage pipes that are either rotten or of inadequate diameter. If the money had been recycled for those purposes the Bill could have had my reluctant support; but the fact is that it is not so. It is the consumers who will be charged with the cost of bringing sewage effluent treatment and of piping and disposal up to the standards rightly required by the EEC.
We ought not to need the EEC to tell us what the standards should be. For years, mincing up turds and putting them into the sea as processed sewage really was a public scandal—"macerated" was the word that was used. I once swam out in a bay—I may say that it was in a holiday resort—to what I thought was a line of fishing floats, until I reached it and found that it was not.
This Bill is a wasted opportunity. The opportunity could have been taken to set up a really effective National Rivers Authority to define the effluent standards and to enforce statutorily the separation of sewage from storm

water disposal. It is unforgivable that sewage works should overflow when there is a heavy downpour. The two systems should be different.

Sir Charles Morrison: Is it not correct that the control of pollution could be carried out more swiftly and perhaps more efficiently by Her Majesty's inspectorate of pollution, which is not of great age?

Mr. Maxwell-Hyslop: If the record of the alkali inspectorate had been such as to fill me with confidence, I might have found that an alluring suggestion. The case for setting up a new, independent inspectorate with its own testing facilities—not using those of some of the principal polluters—is very strong and unanswerable. That is what should have been in the Bill, instead of so much that is.
Again, how does one balance—the Bill does not do it for us—the needs of different sectors of the United Kingdom? In Devon, the population doubles in summer at the time when river flows are at their minimum. The cost of providing impounding facilities to avoid drought when there is a maximum inflow of people who are not normal ratepayers and minium river flows is immense. That cost falls upon the people who live there all the time and who derive less and less benefit from tourism as more and more people bring their holiday homes with them. Instead of staying in hotels or other permanent accommodation. more and more visitors arrive with caravans and tents. with the result that they spend very little, some of which would otherwise go towards the extra infrastructure costs.
Nobody but a fool provides a reservoir at a low level, with the result that all the water has to be pumped at hideous expense, if it can be placed much higher up where the water would flow by gravity. However, those who live in parts of the country to which other people like to go are told that reservoirs must not be put on the moors because that would spoil the view that visitors want to enjoy when they go on holiday. The people who say that do not, however, have to bear the additional expense of low-lying reservoirs from which all the water has to be pumped. There is no rectification of that issue in a Bill that is so large that it had to be printed in two physical parts because the staples would not go though it in one.
At 10 o'clock, which is not so very far ahead, I shall he in the No Lobby. Those are some of the reasons why.

Mr. Wigley: I agree with many of the points that have been made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The sea coast problems to which he referred are also faced by Wales. Wales also has to support a large population in summer and needs to have the capacity to supply it. Many of the additional costs that Wales has to face have to be borne in the south-west, too—in Devon in particular.
The hybridity of the Bill was referred to earlier. The hon. Member for Tiveton did a lot of work some years ago on the question of hybridity. Between now and further consideration of the Bill elsewhere I hope that he will have the opportunity to consider whether this is a hybrid Bill. If he did so, he would be doing the House a service. He might be able to find a means by which to deflect the Bill from its movement towards the statute book.

Mr. Maxwell-Hyslop: My dislike of monopolies is so great that I would not wish to have a monopoly in the detection and processing of hybridity.

Mr. Wigley: I think that many hon. Members could sit at the knee of the hon. Member for Tiverton and learn about the intrigues and the ins and outs of hybridity, which we should not go into in too great a detail now unless we can prove it. I wish that we could.
Wales did not vote for the Bill at the last election. Wales did not want it. It wants it even less now, the Bill having been subjected to weeks of debate in Committee. For once, Welsh Opposition Members were almost totally united, both in detail as well as in their general approach, in their opposition to the Bill. Week after week we put to the Government a central fallacy—the cost of water to the consumer. That point was not answered in Committee and it was not answered on Report.
The Government tried to get away with press propaganda in Wales. They suggested early in March that there would be a massive reduction in the price of water. In a debate in this Chamber on 1 March, the Under-Secretary of State for Wales told the House:
Opposition Members may have a surprise coming to them because it is our intention to give the people of Wales every opportunity to take a stake in their own water company in a way that has not been possible before."—[Official Report, 1 March 1989; Vol. 148, c. 368.]
That does not feature in the Bill, and there has been no suggestion as to how it may come about. The people of Wales will not have a 25 per cent. reduction in the price of water, although Ministers tried to sell it in the Welsh press. The reduction was then disowned during earlier debates on Report. In fact, there will be a massive increase in the price of water. It will be on top of other increases in recent years.
During the last few days I have received a letter from someone who lives in the Aberdare area of Mid Glamorgan. This person pointed out that water rates have increased from £23 in 1981–82 to £107 in 1989–90—a fourfold increase. I prophesy, on the basis of what we were told in Committee, that the price of water will increase to about £250 by 1995. That is because there is a need, as everybody recognises, for considerable investment in the industry to improve standards. The Government argue that the only way to secure the resources that are necessary for the work that must be undertaken is to privatise the industry. The Opposition have argued time after time that the only way that capital funds can be attracted is by a massive increase in the price of water, an increase that would hit hard the poorest people in the community.
There is a danger with privatisation that, as private companies find that they do not have the resources to attract capital, the degree of capital investment will be inadequate. That will have an effect on pollution, of which we in Wales are conscious—pollution in the industrial areas and along our coastline. There is a real danger that there will be a reduction in the capital investment that is so much needed in order to meet EEC standards and those that we ought to have set many years ago.
In Committee we asked the Government to clarify the guarantees for shareholders, but the guillotine prevented discussion of amendments that would have led to a large slice of the shareholding going to consumers within the areas served by the private water companies and also to a slice of the shares going to the employees of the private water companies. The Government have made no such provision. Conservative Members who argue that the water industry will be answerable at regional level cannot guarantee that that will happen. Shareholdings will be subject to market fluctuations. Shares will be bought and

sold in order to make a profit or a long-term return. They will not be bought and sold to guarantee that the private water companies are answerable to the regions that they serve.
The only way in which the finances of privatisation can add up is by the provision of a massive capital write-off of historic debt. If that debt is written off, why on earth was it not written off before, to bring down the water charges that people face? Perhaps for the only time during the passage of the Bill I want to disagree with the hon. Member for Brecon and Radnor (Mr. Livsey), who referred to the low disparity between charges in various parts of this country as compared with France. In fact, the average equated water rate in 1988–89 in Thames was 33p in the pound, in Severn-Trent 51p in the pound, in north-west England 59p in the pound—and in Wales, it was 108p in the pound. That is almost four times the rate in the Thames area. These charges are high and we are facing yet higher charges. If there is to be a capital write-off, why cannot there be one in the public sector?
The capital value of the Welsh water authority is £1,700 million, and if, as seems likely, it is to be sold off for £250 million or £300 million, why do not the Government go the whole way and enable water consumers in Wales to have the shareholding at a nominal cost, and then at least guarantee that there is answerability in Wales? The same formula could apply to the regions of England.
The other part of the Bill deals with the National Rivers Authority. All the Opposition parties argued in Committee that the Bill represents an unwanted and unwelcome centralisation of the Welsh water industry, with the establishment of the centralised form of the NRA. That is not to say that there was not a case for taking away powers from the plcs and giving them to the NRA, but they should not be given to a centralised body in London. That is to take away the powers that the Welsh water authority has over rivers. The version of the NRA in the Bill provides inadequate involvement for important groups who are concerned with rivers, such as anglers and other interest groups. There is also inadequate capital for the NRA, a subject that has already been touched on this evening.
No doubt other hon. Members have received the letter that I have from Professor Edwards, the chairman of the regional rivers division of the Welsh water authority. On 22 March he wrote pressing that the NRA should be allowed
to have the benefit of long-term borrowing where this is necessary in order to carry out any of its statutory functions … the authority must have flexibility to use loan finance for all capital expenditure.
Some progress was made on the issue of flooding earlier tonight, but the general argument has not been dealt with—and this letter was sent by someone who is involved in its detail.
Many outside groups are unhappy with the Bill. The National Farmers Union of Wales has written:
Farmers are deeply concerned at the lack of control over the ability of the proposed private water companies operating as monopolies to raise their charges, particularly in rural area where their costs are higher.
That was one of a number of concerns expressed to us by people who usually support the Conservatives and who are unhappy about these proposals.
Farmers and conservationists are fearful about clauses 7 and 9. Recreational bodies have fears about access to land—97,000 acres of it in Wales, forming a considerable part of the most beautiful areas there.
There are still no adequate safeguards, despite recent Government statements, against the dangers of selling off. There are fears among environmentalists about the Bill's effect on pollution, and among the poverty lobby about its effects on disconnection and compulsory metering. There are fears in Wales that we shall once again be at the end of the queue and that the Bill will do nothing to help solve our problems or to redress the problems that Welsh water consumers have faced over the years.
Although we have put an awful lot of time into it, the Bill leaves the House as unacceptable as it was back before Christmas. That is why my hon. Friends and I will most certainly vote against Third Reading.

Mr. John Marshall: I have listened with great interest to a number of speeches in this debate. The speech by the hon. Member for Brecon and Radnor (Mr. Livsey) led me to assume that the once great internationalists and Europeans among the Democrats have now become the arch-chauvinists. The hon. Gentleman attacked the French with a venom that seemed like the reincarnation of the first Lord Beaverbrook.
I listened with great interest to the speech of the hon. Member for Gower (Mr. Wardell). He complained about the quality of our water, the speed with which the Government reacted to the bathing-water directive, the quality of our rivers and the inadequate level of investment in the water industry. He seemed not to realise that every argument he put forward underlined, rather than undermined, the case for water privatisation. He is typical of many who oppose the Bill, those who continue to attack the consequences of the very status quo that they seek to defend. The hon. Gentleman seemed to forget that the problems of the water industry are the direct consequence of public ownership. His argument about the quality of our rivers was an argument for the National Rivers Authority.
The problems of the water industry are aggravated by inadequate capital investment. That is an argument that Opposition Members should well understand; it was the Labour Government who cut investment in the water industry. As long as the water industry remains in public ownership, it will receive inadequate capital investment. So long as it has to compete with schools, hospitals, roads and railways, it will be starved of the investment that it needs. Once the industry is in the private sector, it will be able to tap the market in the same way as Cable and Wireless has done so successfully—it has increased its capital expenditure dramatically.
I hope that, when my hon. and learned Friend finalises the details of the privatisation issue, he will give the privatised pits a decent dowry, and that a substantial proportion of the money raised by privatisation will be used to improve the balance sheets of the plcs so that they can invest substantially in the capital expenditure that is so necessary.
We have heard from hon. Members such as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) about the problems of monopoly. He forgets that the water companies will be controlled much

more effectively in the private sector than in the public sector. The experience of British Telcom and British Gas shows that. No Secretary of State for Energy ever managed to control Sir Denis Rooke——

Mr. Elliot Morley: Why, since British Telecom has been in the private sector, has the number of complaints from domestic and commercial users increased dramatically?

Mr. Deputy Speaker: Order. Not on Third Reading of the Water Bill.

Mr. Marshall: I shall ignore that irrelevant and inaccurate interruption. My point about British Gas is that, when Sir Denis Rooke presided over a company in the public sector, Secretary of State after Secretary of State tried and failed to control him. Ofgas was the first body to control Sir Denis Rooke, and Oftel has worked, too——

Mr. Beith: But British Gas had to be referred to the Monopolies and Mergers Commission.

Mr. Marshall: The important thing is that privatisation worked, and it will work with the water industry too——

Mr. Boateng: It says here.

Mr. Marshall: I write my own speeches. I do not know what the hon. Gentleman does, but I know from having listened to him in Harare yesterday that he spoke for more than an hour when he was billed to speak for less than half an hour.
I welcome the possibility of water metering. The present system of charging for water is unfair. Why should the pensioner, consuming one third of the water consumed by her next-door neighbour, pay the same for that water? No one suggests that there should be a standard charge for electricity——

Mr. Boateng: Will the hon. Gentleman give way?

Mr. Marshall: As long as the hon. Gentleman is briefer than he was yesterday.

Mr. Boateng: Does the hon. Gentleman share my concern about the impact on the pensioner of the standing charge and will he urge the Secretary of State to amend this Bill in another place so that the pensioner is protected from the standing charge?

Mr. Marshall: I happen to believe that the pensioner, who will already benefit substantially under the community charge, should be a substantial beneficiary of water metering. A pensioner household consumes very much less water than households with three or four children and sometimes with three or four wage-earners. Why should pensioners, as they do under the present system, pay substantially the same amount for water when they are consuming much less of it?
I also believe that water metering would lead to much more economical use of water. When the right hon. Member for Birmingham, Small Heath (Mr. Howell) was "Minister for Drought" in those long-lost days of the Labour Government, he was able to persuade people suddenly to reduce their consumption of water dramatically. I believe that, if we had water meters, there would he no need for a minister for drought to persuade people to use less water; the price mechanism would do it for him. Why should people pay for large amounts of water when


they are small consumers? It is surely much fairer that the pensioner and the single person should pay less than large households.
The Water Bill is a Bill for greater efficiency. No one can regard the water industry under public ownership as a paragon of efficiency. Under private ownership, the water industry's prices will be controlled. The only way in which water companies will be able to increase profits is by becoming more efficient. Surely that is an objective we should all applaud and approve.
I should like to ask the opponents of privatisation why it is that the Socialist President and Prime Minister of France have shown no enthusiasm for nationalising their water industry. The answer is simple: they understand that a water industry under private ownership is more likely to be efficient in providing the water the people need.
Recently I read a speech by the right hon. Member for Plymouth, Devonport (Dr. Owen) addressing the Scottish council of the SDP—I believe it is known as a cottage meeting. He said that the Water Bill was encouraging French companies to buy British water companies. He seemed to ignore the fact that there is a golden share to prevent the plcs from being acquired as soon as privatisation takes place. I was somewhat surprised to see the great former Foreign Secretary, the man who was the great European—[AN HON. MEMBER:"Who said he was great?"] He did; he was always telling us he was great. I was surpised to see him becoming the great chauvinist and the great opponent of the France.
I believe that this Bill will provide the capital to modernise the water industry, clean up our rivers and improve our beaches. It is in the interests of the consumer, the efficiency of the industry and the environment and it should be warmly welcomed.

Mr. Nigel Spearing: I hope that the speech of the hon. Member for Hendon, South (Mr. Marshall) will be widely distributed, not only in Hendon but throughout the country, because it well illustrates many of the errors into which he and his hon. Friends have fallen, not least the Secretary of State, who I am very glad to see here. If I had the time, I would enlarge upon the point about the single user of water. We all use water for all sorts of purposes, and the single elderly pensioner requires cleanliness from everybody she meets and everyone who deals with food and the cleanliness of the community. Without pure, clean, cheap water public health would be at risk.
When the House was built it relied on privatised water. I think that the Chelsea water company supplied it. Unfortunately, at that stage, when that water was used it disappeared with all its contents into the river and it was not until the 1860s that the Metropolitan Board of Works built the Victoria embankment, largely for intercepting sewers, and we had drainage in London.
The Bill has three major aspects which so far have not featured largely in debates either in Committee or on Report. The first is that for the first time in history our foul water drainage and purification will be privatised. I believe that this is the first time that this has been tried anywhere in the world, but the Minister will correct me if I am wrong. Secondly, the private firms controlling foul water

disposal will for the first time—after the golden share disappears—be controlled from outside the United Kingdom. Thirdly, these private firms will not be confined, as private water companies are at the moment, to the supply and disposal of water. They will be permitted to diversify. That is a point which the Secretary of State confirmed at the start of the debate when he kindly gave way to me.
I have in my hand a press release from Mr. Roy Watts, of the Thames water authority, dated 24 November. He talks about the future and says:
'We shall also be able to move into new, non-regulated areas of activity at home and abroad, water related or not, for the benefit of future shareholders, and customers.
[Interruption.] I hear the Secretary of State—I think it was he—saying "Hear hear."
Those three features are, I believe, even more fundamental than the idea of private water supply, which has been largely the theme of Conservative Members. I believe that it is wholly contrary even to that Victorian virtue of collective activity in pursuit of public health, because no Victorian believed in private disposal and purification of water. That is what the Government are doing—largely, I believe, because of their ignorance of what all this means. They are also hiding from the public their real motives and the likely effects of the legislation.
Of course, the National Rivers Authority will be an improvement over what we have at the moment, but it could have been achieved without privatisation. I hope that the NRA will carry out the same model activity as the late lamented Thames Conservancy. We on the River Thames remember that body, which was set up in the middle of the Victorian era, and hope that the NRA will, through proper local consultation and balanced use of many types of water space, bring back the sort of administration that we enjoyed on the Thames many years ago, and which I hope will be recreated. But that has not been the theme of Conservative Members. We have had carbon copy speeches, of which the contribution of the hon. Member for Hendon, South was typical. They have said that there was no, or very little, public investment prior to 1979 and it had been inadequate and impossible post-1979, conveniently forgetting the past 10 years.
Both arguments are specious. The Government do not want to invest in public water supply and disposal. They do not believe in it because they do not believe in public service as a concept. There may be a few Conservative Members who believe in public service as a concept, but I do not believe that the Secretary of State does. Where public service has remained, instead of being given, even on a limited scale, quality, sustenance and high standards, it has been undermined in Bill after Bill, and regulation after regulation.
As an example of this—I am sorry that the right hon. Member for Woking (Mr. Onslow) is not here—the Government have removed local authority members from water authorities. How much more undemocratic can they get? I believe that that was done because originally they wanted to privatise water anyway and that was a step many years ago in that direction. It carries dogma beyond the limits of logic, common sense and political sagacity. Political sagacity is in short supply among Conservative Members and particularly at No. 10 Downing street.
I wonder what Alderman Roberts of Grantham would have said if it had been suggested that the purity and public health of Grantham would in future depend on a private


company whose area covered the whole of the east midlands and East Anglia, which had shares traded in Tokyo, New York and Frankfurt, which could perhaps be controlled from anywhere in the world, and which could be subject to a takeover bid by any multinational. I wonder what today's inhabitants of Grantham would think about that. I do not think that they know the full implications of the Bill, and that is one of the problems.
When the Secretary of State opened the debate he fairly and quite properly lauded private water suppliers. We in London know that our first private water supplies came from the great New River company. It collected water from springs in Amwell in Hertfordshire and brought it to London and sold it. It was very good water. It came from the chalk of Hertfordshire and was God-given. There was nothing wrong at that time—and, indeed, there is not now, in Tory terms—in the collection, impounding, piping purification, distribution and sale of pure water by private companies. That is carried on at the moment under due regulation, but the Bill does not continue that pattern. It destroys a pattern of statutory water companies which I do not support, but at least they worked in harmony with the municipal services for over a century. That will now go.
Not only has the London county council disappeared but the Greater London Council has disappeared with it. In my constituency that is of considerable significance in terms of health. Every drop of water which falls on the roofs, roads and pavements or comes from the baths, closets, factories, works or workplaces in north London is piped into my constituency to the Beckton purification works. From there it is pumped over 30 ft from the low-level to the high-level sewers before it is purified and goes into the Thames.
When I first became interested in politics my party chairman was a member of the London county council and was chairman of its rivers and drainage committee. At that time he was heavily involved in a huge capital programme of £20 million. That does not sound much now, but I assure Conservative Members that in the 1950s it was a great deal of money and it was spent on improving the northern and southern outfall works of the London county council. Nobody heard much about that. We did that in London for the disposal of water just as it was done in Birmingham for the supply of water, and we are to lose control even of our pumps and the equipment that deals with these matters in London.
The same loss will be suffered in the constituencies of every Conservative Member and that means that we shall be in the hands of managers such as Mr. Roy Watts. They will be cruising the world looking for worthwhile investments, perhaps in water or perhaps in other things. They will he sharks in an international sea. The plcs will be predatory in order to sustain their activities. In the end the Director General of Water Services will have to agree the necessary funds to keep water supplies going in London and every other part of the country. What collateral for any international speculator!
If the Bill goes through the other place substantially as it is now, we will have a sort of internationalisation or multinationalisation of our public health services. The House and the public may not yet have appreciated that. Ministers are in the Chamber. If I have said anything that is incorrect I shall gladly give way and allow them to correct me. The Bill reaches the low water mark of the limited and unacceptable philosophies of the Government. It pushes private ownership into areas where it is not only

unwelcome but unworkable and in the end the public will not stand for that. It besmirches the sense of responsible citizenship which lurks within most Conservative voters. That is the reason for their present unease. If the Bill becomes an Act it will pollute the standards of public life throughout the nation in the way that polluted water poisons the body. In due course, but not first without weakening the body politic, the Bill and its works will be rejected because a reluctant and disbelieving public will not stomach it or the Government from whom it sprang.

Sir Charles Morrison: Most of the speeches so far have been aimed at the contents of the Bill. On the whole, I should like to look at it rather more politically. On reflection I have decided to vote in favour of Third Reading, but without enthusiasm, because I do not think that there is much, if anything, to be gained from an upheaval which will do no more, as my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said, than turn public monopolies into private monopolies.
I know that the water plcs will enjoy the freedom to borrow in the market the capital that they need to invest and certainly a great deal of investment is needed. But existing water authorities could enjoy that freedom as the result of an administrative decision freeing them from the constraints of the public service borrowing requirement and the overall effect on the economy would be precisely the same.
I shall accede to the Chief Whip's request to support the Bill even though that means that I shall be acting contrary to the desires of Conservatives in my constituency. I emphasise the word "Conservatives". I could say all Conservatives or more certainly all Conservatives who have spoken to me about the Bill. I suspect that lurking somewhere in my constituency there is one or perhaps about 100 Conservatives who support the Bill. However, I must admit that I have not yet met them. That is of some concern to me but it may be a worry about 100 times greater for the Government because I doubt whether my constituents are unique.
My worries fall roughly into two sections. First. there are those who are worried about the National Rivers Authority. The objectives of those people and the objectives of the Government are not very different, but those people do not share the Government's optimism about the Bill's ability to achieve the Government's objectives. Obviously the proof of the pudding will be in the eating. As my right hon. Friend the Member for Woking (Mr. Onslow) said, there is much concern among anglers and others. Their concerns have not been adequately expressed because time for debate has been limited or non-existent. Therefore, I hope that the Government will listen with sympathy and with concessions in mind to the debate in another place in the knowledge that those who are worried about the NRA, simply want to be more certain that it will live up to expectation.
The second section of people who are much more opposed to the Bill are the massive numbers who are. concerned that they will have to face a major rise in prices. It is difficult to believe that they are totally wrong. The rise in prices may be the fault of the Labour Government, who cut investment in water, but the electorate now care little or nothing about that Labour Government. For some of


us 10 years ago may seem like yesterday, but for the man in the street 10 years ago has disappeared into the mists of time, like the South Sea Bubble, the loss of the American colonies and other disasters. Therefore, I urge the Government to remember that, while the Whips may hold sway in the House, they have no influence in the country.

Mr. Pike: The hon. Member for Devizes (Sir C. Morrison) would be better advised at least to abstain tonight, if he does not follow his conscience and vote against Third Reading. I do not believe that there is any reason why he should feel confident that the other House will take the necessary action to put right a Bill about which he has expressed strong reservations.
The Secretary of State opened the debate. He gave his reasons for believing that Government action was necessary to deal with the problems in the water industry. If he really believes that the position is as he stated, he should recognise that the present set-up for the industry results from the Water Act 1973, which was implemented by a Conservative Government. Changes were made by the Water Act 1983 which removed local authority representation from water authorities.
If I had been able to make an intervention in the Secretary of State's speech, I would have asked him if, in all honesty, he believed that the Minister who steered the 1973 Act through the House should still hold office in the Government as a member of the Cabinet if the legislation was as disastrous for the industry as the Secretary of State believes. If it has failed, surely the Minister who made that terrible blunder, in the Secretary of State's view, is not fit to hold office.
The hon. Member for Pudsey (Sir G. Shaw) thought that in the main we can be proud of the water industry, although there are problems. The Select Committee on the Environment drew attention to some of the problems when it inquired into rivers and estuaries in 1987. One result of that is the establishment of the National Rivers Authority. It has to be accepted that it was not the structure of the industry put through in the 1973 Act, which set up the river basin concept and the 10 authorities, that led to any failure. If there have been failings, they have resulted from lack of investment in the industry, which is directly the responsibility of Government.
On numerous occasions Ministers have quoted what happened during the Labour Government's period of office between 1974 and 1979 but they did not mention that the Conservative Government, who have been in office for almost 10 years—next month will see the tenth anniversary of them taking power—have had sufficient time to ensure that water quality is right, that the standard of rivers is improving and that sewage treatment is being carried out more effectively. All the necessary work might not have been completed, but if the Conservative Government had made proper investment over the past 10 years there would not be as many problems.
Only a few weeks ago in his Budget speech the Chancellor announced a surplus of £14 billion to £15 billion but still the Government have failed to invest the money necessary to deal with the problems. Investment is

the key. If the Government had a mind to do so, they could retain the industry in the public sector. It does not have to be privatised.
The Secretary of State failed to recognise that the Labour party has not argued for the status quo or that no changes are necessary. We accept that some things need to be changed. We accept that the separation of the water functions from the regulatory body is a step in the right direction. However, at every stage of this Bill we have expressed our fears that in the end the NRA will not necessarily receive sufficient powers, staffing or resources to carry out its function. The Minister referred to the powers of the director general. We fear that the director general will not have the powers to deal with the regulatory functions provided for that position in the Bill.
Not only is there strong opposition to the Bill in this House, but water privatisation did not receive the support of the majority of voters at the last general election. Only one party during the last general election campaign was committed to privatising the water industry and that party did not receive the majority of votes from the people voting in that election. I accept that it received more votes than the Labour party, but if we include the votes for the other Opposition parties, there were far more votes against the water industry being privatised than there were in favour of it.
Opinion polls show that the public are still opposed to the privatisation of the water industry. This Bill will not deal with all the problems. At the end of the day, the legislation will fail because profit will become more important than dealing with the problems in the industry.
If the private sector had been able to yield a profit from water supply, instead of having 20 per cent. of the water supply in the private sector now, there would have been 100 per cent., because people would have invested in it and developed the system. The simple fact is that sewerage has always been a public service function because there is no profit in sewerage and there never will be.
If the hon. Member for Hendon, South (Mr. Marshall) believes that metering is a fair solution, he fails to recognise the penalties that will be imposed on people with large families, families with disabled people in them, and other families who face extra demands for water because of problems within the family.
I recognise that other hon. Members wish to speak so I will be brief. I believe very strongly that this Bill fails to tackle the problems. If the Government were willing to deal with the problems in the industry, there could be an effective regulatory body and an NRA. With proper investment for the industry and a willingness on the part of the Government, the problems could be dealt with. The public would have confidence that the public sector could solve the problems. The Government should change their minds and drop the Bill now.

Mr. Alastair Goodlad: I support the Third Reading. Over the years I have had the pleasure to be a member of many Standing Committees, but being a member of the Water Bill Committee gave me the most unalloyed pleasure. My hon. and learned Friend the Minister for Water and Planning and his team of Ministers comprehensively outplayed the Opposition in every


department of the game. They won all the arguments, not only because of the skill of their advocacy, but because of the inherent superiority of their case.
I was very interested to hear the remarks of the hon. Member for Copeland (Dr. Cunningham), who came down as unambiguously as I have ever heard any Opposition Front Bench spokesman come down in favour of renationalisation of the water industry. The Labour party has lost much of its empire, but it is re-finding a role, nationalisation. Clause 4 is what the Labour party is all about—the means of production, distribution and exchange.
My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) says that this is the biggest act of nationalisation ever done by the Conservative Government; if that be the case, perhaps the Opposition will follow us into the Lobby tonight.
This measure differs from any other denationalisation measure in so far as a quarter of the industry is already in private hands. I would like to talk briefly about the statutory water companies, which have supported the Government's proposals to transfer the water supply and sewerage operations of the water authorities into the private sector and have been involved in discussions with the Department for many months about the details. They have certan legitimate concerns about how their interests and those of their consumers and employees will be affected.
The areas of concern are, first, debt write-offs. The statutory water companies cannot be relieved of their present debt liability in the way water authorities can. Many of the water companies had very high gearing ratios and the adjustment of water authority debt to provide favourable gearing will inevitably cause statutory water companies to be less favourably regarded by financial institutions.
Secondly, there are the flotation terms. These might make investment in water service plcs a more attractive proposition than a statutory water company and could reduce the relative creditworthiness of the statutory water companies.
Thirdly, there are the differing financial regimes. The authorities and the companies have operated under different regimes approved by Parliament. In the case of the authorities, this has tended to produce low levels of borrowing and high charges, whereas with the statutory companies there have been high levels of borrowing and low charges. The rate of return is therefore very different, as is the level of charges under which the undertakings will enter price increase limitation regimes. Unless these differences are recognised, the ability of the statutory water companies to fund their businesses will be prejudiced, as they will be seen as less creditworthy than the privatised water authorities.
Their capital structure is unique. In addition to conventional debenture and loan stock borrowing, they are based on ordinary share capital, whose dividends historically have been subject to statutory limitation. The yields on these different categories of shares have offered virtually complete security as a result of the ability of the companies to levy rates on consumers reflecting the costs incurred. These shares were attractive to investors seeking fixed income securities offering franked income. The situation will now be totally changed, and it follows that

the K-setting regime should recognise the need for the statutory water companies to establish a substantial equity base.
Fourthly, on takeovers, my right hon. Friend has announced that the privatised water authorities will be given a golden share to protect them during their fledgling years after the flotation. Although the statutory water companies are already in the private sector, the fledgling argument could also apply to them. They will have to adjust to a different financial and commercial regime; they will have to adjust to the requirements of the Director General of Water Services and the NRA and will have to carry out substantial capital works in order to comply with the requirements of the EC directive on water quality. The reasons for giving the privatised water authorities protection against takeover could equally be argued to apply to the statutory companies.
My right hon. Friend has also announced special MMC procedures in respect of mergers of water undertakings which have a gross asset value of more than £30 million to ensure the effective operation of comparative competition. However, I do not believe that the size of the operation is any guarantee of efficiency. Small undertakings can be just as efficient as large ones, and in some cases more so, and I do not think it is logical that the director general should be deprived of efficient comparators simply because they are small. This is certainly an argument for applying the MMC procedures to all undertakings.
I am aware that my right hon. Friend will have a discretion to refer small mergers, and I hope that he will occasionally be disposed to exercise it. As my hon. and learned Friend said in the debate on Report stage:
to preserve all 39 water undertakers in independent ownership … would be to tend to freeze the existing pattern of ownership in the industry, and there is no reason to suppose that … is necessarily the best or most efficient.— [Official Report, 22 March 1989; Vol. 149, c. 1176.]
It is likely that in certain areas that course may be the most appropriate in circumstances of comparative competition. I hope that my right hon. Friend will bear in mind the fact that where there is no mandatory requirement to refer there may be a public interest in so doing.
These are matters to which there is no easy answer. I know that my hon. and learned Friend the Minister has listened carefully to the Water Authorities Association and the companies and that his officials have been extremely patient and helpful. I hope that during the remaining course of the Bill answers will be found to those problems and I wish the Bill a successful passage.

Mr. Boateng: We have concentrated on Third Reading on two aspects of privatisation—the privatisation of environmental protection and amenities on the one hand and the privatisation of the collection of water and its distribution on the other. At the outset the Secretary of State reassured us that he did not intend to privatise the raindrops, only the places where those raindrops are collected or where water welled. We are supposed to give thanks for that much comfort.
I want to concentrate on one other aspect of privatisation—the privatisation of the public health facility that the public supply and distribution of water has traditionally sought to protect.
When we look at the formation of the water industry as we know it today, we see that our Victorian forefathers


sought above all else to protect the nation's health. It is that self-same public health which the Opposition submit is at risk as a result of this act of privatisation.
The Secretary of State told us, in an insight that he had into Labour history—I would say a blighted insight—that the Bill was the single most important measure of environmental protection since the Labour party was a gleam in Keir Hardie's eye. That was the Secretary of State's analysis, which I want to take him up on. I want to look at a period in which the Labour party was a gleam in the young Keir Hardie's eye.
We heard from the hon. Member for Pudsey (Sir G. Shaw) of the situation in the French Cameroons. I know nothing of the French Cameroons, but I do know something of the Kingdom of Ashanti, where I was baptised, and I do know something of London, the city in which I was born.
I want to take the Secretary of State back to the 19th century, as he would have us do, and refer him to a letter in The Times of 11 February 1875 from a Mr. Humphry Sandwith of Wimbledon. What was it that created such a feeling of anxiety in Mr. Sandwith at that time? He begins his letter to the editor by reminding him of the great steps forward that were taken in water sanitation. He says:
On the outbreak of the Ashantee War you did good service in the cause of sanitary reform on behalf of our negro fellow-subjects and a few unfortunate Englishmen who were condemned to linger in bad health or to die on that pestilential coast. You pointed out clearly that a bad climate was robbed of half its terrors if the inhabitants could command pure air and pure water".
I am bound to say that I take issue with Mr. Sandwith on his description of the Gold Coast as being a pestilential coast. I also take issue with him on the benefits to the people of the Gold Coast of the Ashanti war. My great grandfather fought on the losing side in that conflict. However, I am bound to say that as a result of his efforts and those of many of my ancestors, we were able to ensure that Ashanti became only a protectorate, not a colony. I know that many Conservative Members from the district commissioner brigade know full well the distinction between a colony and a protectorate. The battle was not completely without its victory.
The editor of The Times is taken to task on the impact of the state on that day in 1875 of drinking water and its supply to certain sections of our city. Mr. Sandwith says:
I now venture to ask for your powerful aid, not on behalf of Africans, but of the unfortunate dwellers in the West-end of London, the peers, spiritual and temporal, the baronets, knights and esquires who inhabit the fashionable quarters of this singularly filthy and wealthy city.
His reference to a
singularly filthy and wealthy city
is redolent of certain aspects of the city in which we live today. He goes on:
The immediate cause of my appeal is the following fact. At a large West-end club the drinking water supplied by a certain water company left such abundant deposits of mud in the cisterns that it was necessary frequently to clean them. I saw large cakes of this dried mud, which had a peculiarly offensive appearance; a portion of it was sent to an eminent analyst.
Under the Bill, which the Government seek to push through on Third Reading, the public will be obliged to rely on water companies themselves for analysis, but in those days at least that work was done by an independent analyst. The writer continues:

He found it to consist of various unwholesome debris and of a considerable quantity of human excrement. Now, Sir, I ask, are the people of this city, are the wealthy and refined, as well as the poor and the helpless, content to go on drinking this repulsive mixture? A grand scheme is afloat to tunnel the Channel, millions are found to lend to Czars and Sultans; cannot London find money to bring us pure water from Wales?
That was in the 19th century, when that correspondent to The Times felt it necessary to draw to the attention of the editor and the general public the consequences of privately owned and distributed water. His response was to suggest—as came to be the case—that the municipalities and the public interest be protected by bringing the supply and distribution of water under public control. That made sense then to our forefathers in Ashanti and in London.
The Secretary of State for the Environment—and we have done our research—does not appear to be a member of any London club, although no doubt he would count himself among the wealthy, if not the refined. It must be said that his hon. and learned Friend does belong to the Carlton. However, one would have thought that even out of concern for the wealthy and refined, for the members of London clubs—never mind the poor and oppressed for whom the Conservatives have never shown concern—and for public health, even at this late stage the Government would abandon this disastrous measure. In so doing, they would save themselves from the fate that Lord Rosebery pointed out lay in wait for any Government. He said:
Water is one of those points which has wrecked a powerful government before now, and may wreck governments again.
We believe that the Bill will wreck the present Government, and that they will rue the day that they brought it to this House.

Mr. Alistair Burt: When the history of this Bill is written, the contributions of the hon. Member for Brent, South (Mr. Boetang) throughout the Committee stage will be remembered as a delightfully irrelevant footnote. He has kept up that tradition right to the end, and I am sure that the whole House thanks him for his further eloquent but totally irrelevant contribution to the passage of our great Bill.
As we near the conclusion of this stage of the Bill, it is right that we should be as honest as possible—as we always are. My right hon. and hon. Friends recognise that it is a tricky Bill and one of whose merits it is difficult to convince the public. However, the public will ultimately be convinced of its value because it epitomises many of the things that the Government have striven to achieve over the years. The Government have taken upon their shoulders the mantle of the radical, belying the term Conservative that is part of the title of the party. We have been radical in respect of this issue.
The Government have also tackled, and not for the first time, sceptical public opinion. In this country, public opinion is innately conservative. Much needs to be changed that can only be challenged by the radical. We have also challenged the cosy presumption that public and state is best—and in some cases is all. That belief flies in the face of what people have often said, and flies in the face of that which people have often voted against. Nevertheless, it is something we have had to tackle.
In dealing with the objections of my own constituents, I have found that the more the Bill is explained to them,


and the more that matters are made clear, the more support the Bill generates. Many people are unaware that 25 per cent. of the country is already served by private water suppliers. Many people to whom I have spoken have been unaware that there is public regulation contained in the Bill to ensure quality—the National Rivers Authority, the Director General of Water Services. Many have been unaware of the failure of past investment which we have covered innumerable times, both in Committee and on the Floor of the House. It is important that some of the failures of previous Governments have not been well touched on by hon. Opposition Members tonight.
In dealing with people's concerns, we have been able to point to some encouraging things. We have recalled their concern about other measures carried out by the Government, principally gas and British Telecom. When the measures have been put through, opposition has fallen away and there has been encouragement of wider share ownership and wider participation by employees in their own industries. All these are things that the Government have tackled in many other areas in exactly the same way as they seek to tackle them in the water industry. There are areas where public concern has been very strong at the time that the measure has gone through Parliament but has faded away afterwards as the benefits have become clear.
When it comes to future benefits, I ask the Minister to comment on a couple of things when he replies to the debate. The first is the benefits that may come from the sale of expertise abroad. When private companies develop expertise in dealing with water in this country that technology will be available for use abroad. Why do we always assume that the French will come here and run our industry? Why do we not assume that people in this country will be able to export their expertise?
Perhaps the Minister should also mention the consumers' charter. Again, this is something which is often unknown to our constituents until we talk to them about it as a future benefit which they do not at present receive but which they will get from the way in which water will be supplied to them in future.
If there is one matter, in particular, which is inadequately dealt with at present and which the Minister may be able to clear up for the future, it is disconnections. The Minister is aware of the reservations felt that I and many on both sides of the House feel about the fact that at present a court order is not necessary before the water supply is disconnected. That should become the norm. I ask the Minister very strongly to consider this and see what the Director General of Water Services may make of such a code of practice if he could put it his way for consideration. That would be a very useful thing to do.
My constituents are particularly reassured when they think about the policies of hon. Members of the Opposition. When they think about some of the measures that we have introduced, they remember that the Opposition have caved in to our views on the sale of council housing, on the rights of the individual in trade unions, on renationalisation of many industries. They are encouraged that once again our views will hold sway and that once again the Opposition will cave in.
We believe that the measure will work. It must work. With these things in mind, opinion in the country will be convinced and the measure will be seen in future as a great success.

Mr. Elliot Morley: In my brief remarks I will not go over many of the views, well expressed in the course of the debate, about the mistaken assumption that taking a natural monopoly and putting it into the private sector will somehow improve quality standards and also protect consumers. I will just touch on the argument that those people who live alone will benefit from metering. It ignores the fact that, on the water boards' own figures in the trial areas where metering is taking place and where the standing charges have been applied, even a pensioner will pay significantly more under metering than at present. Those people who have more than one person in the house, who have young children or who care for an elderly relative, will pay a great deal more because of the greater amount of water that they will need. It is not very helpful for some hon. Members to suggest that water will be rationed because of its high costs and that that is a good thing in itself.
Something which has not so far been dealt with but which came up in Committee is the concern of people who have bought houses on estates where the sewers, laid by private contractors, are sub-standard, and will not be adopted by the local water authorities or private plcs, if and when they come in, will not adopt the sewerage systems. Incidentally, according to the argument of sonic Government Members, everything in the private sector is rosy, everything will be more efficient and better delivered. If that were the case, constituents of mine in Winchester avenue, Bottesford would not be suffering from sub-standard sewerage systems. Nor would those of the many hon. Members from all parts of the country who have raised similar problems.
Under the Bill the same people who laid those sub-standard sewerage systems will presumably be able to tender successfully to lay more such systems. The Bill does not protect quality standards. It represents yet another missed opportunity. It could have improved water quality, and protected conservation access and sites of special scientific interest. The Secretary of State has conceded a very small point on national parks: there will, he says, be consultation on the part of the privatised water companies. Nevertheless, they can still ignore the wishes of local people and the parks authorities, and proceed with developments that do no fit in with the areas in question.
Some hon. Members have argued strongly for tight regulation of prices. Such regulations will pose the risk that companies will resort to maximising their assets by capitalising those assets—in this instance, land, often of scientific importance and natural beauty. The Bill poses a danger to conservation, public health and water quality. It also represents a missed opportunity of dealing with private sewers and giving water companies powers to step into estates such as Winchester avenue, make good the damage and bill the people responsible, rather than giving them rights to tender for contracts to do the same again to the public system.

Mrs. Ann Taylor: The Minister of State found himself in rather a bad temper earlier—not for the first time, I would say. I do not intend to follow his example. I was, indeed, intending to start on a note of congratulation: the Secretary of State was absent for some of our debate this evening, and this time it was for a very


good reason. He was attending the christening of his grandson—[Interruption.]—of his two grandchildren: I congratulate him doubly. I shall make the obvious comment: I trust that they were not christened with Perrier, which seems to be the Secretary of State's favourite.
This evening's debate has been interesting—despite being the culmination of many hours of discussion—not least because of the enlightening comment from the hon. Member for Hendon, South (Mr. Marshall) that water will be better in private hands because those who can afford it will be able to obtain the water that they need during a drought. That shows the market going to extremes.
A Third Reading debate is supposed to consider a Bill as it stands after Committee and Report stages. Considering the Government's attitude, however, it is not surprising that today's debate has been something of a repeat of the Second Reading debate in December. Throughout our proceedings, the Government have dug in their heels and refused to listen to reason or public opinion, or to take account of the practical considerations that formed the basis of our debates and amendments in Committee.
There are three basic reasons why we—and public opinion—oppose the Bill as it stands. The first is one of principle. When we talk about the water industry, we are talking about an industry that is vital to the individual health of each and every one of us. More than that, we are talking about the public health of the nation, and indeed the long-term health of future generations. That is one of the reasons why the public know the dangers of water privatisation better than the Government. They recognise that advances in water purity and the safe disposal of sewage have contributed more to improvements in health than many of the drugs and medicines that are given so much credit. Almost all of that has been done at public expense by public authorities—in the main by those bodies that the Government love to vilify, the local authorities.
The second reason why we opposed and still oppose the Bill is practical. Everyone knows, and we have always said, that investment is necessary to bring the industry up to scratch. We have had arguments about the level of investment under Labour and Conservative Governments, and I am happy to repeat them this evening. The facts are clear: the average level of investment under the last Labour Government was substantially higher than it has been under Conservative rule. Leaving that aside, and looking to the future, what is likely to produce more investment?
The Government argue that the private sector will provide more investment. Leaving aside the Chancellor of the Exchequer's comment that investment in the private sector will be more expensive—which must somewhat reduce the amount of investment that the industry will receive—will the private sector invest more to clean up our rivers, to tackle pollution, to clean up our beaches and to provide pure drinking water, free of aluminium and nitrates and, more expensive to achieve, free of lead?
What incentive will the private sector have to make that level of investment? What incentive will there be for the industry in private hands to invest an extra £1 billion to clean up the beaches an additional £3 billion to improve drinking water quality or an extra £9 billion to confirm

with EEC directives? What extra return will investors receive from additional investment of that magnitude? Will the industry sell more water or dispose of more sewage? Of course it will not.
The return to the private investor will not be high enough unless the Government's flotation is done in such a way as to cheat the taxpayer and the consumer. Water authorities are supposed to be valuing their present assets and liabilities—not an easy task when, for example, the Yorkshire authority does not know the condition of 70 per cent. of its sewers and does not even know where 30 per cent of them are.
The sampling techniques which form that basis of the asset management plans which are being drawn up have been described to me by a statistician, consulted professionally about the issue, as nothing more than
an attempt to obtain a statistical blessing on guesswork.
Anyone who buys into the industry will be buying a pig in a poke, which, on the basis of market forces, does not look that attractive. Indeed, the stockbrokers Seymour Pierce Butterfield Ltd. said in their report on the industry and privatisation:
It is accepted that in terms of core operations, such as water supply, sewage treatment and disposal, growth is distinctly limited.
That does not sound an attractive proposition for the private investor. That, however, is the position before Government intervention. I say that because the one thing this so-called free market Government cannot do is let a privatisation of this kind flop. That is why they are busy interfering with and intervening in market forces, stacking the cards in favour of potential investors.
I am sure that we shall soon hear about proposals for debt write-off. The massive debts of the water industry will not be passed to the private sector. They will be met, as usual, by the taxpayer. We now have the Government's latest document for price-setting. That confirms what we discovered in Committee, which is that the initial round of price-fixing will be done by the Secretary of State and that the new regulator, the Director General of Water Services, will not be involved.
We heard today that the Secretary of State has appointed the first Director General of Water Services, the man who, according to the Government, will look after the interests of consumers. He is, the House will not be surprised to learn, a Treasury civil servant apparently with considerable experience of the rates of return of nationalised industries, but with no experience of looking after the interests of consumers.
That fits in with the Government's outlook generally, because when the first round of price-fixing takes place in the autumn, consumer representatives will not be consulted or have any input. Indeed, the document on price-fixing says:
The primary duty will be to ensure that companies are able, in particular by securing reasonable returns on their capital, to finance the industry.
It goes on to say that subject to that duty will be a
duty to ensure that the interests of customers are protected.
In other words, the duty to ensure the interests of customers, of consumers, is given only as a secondary duty, secondary to the job of securing reasonable returns on capital. That means that prices will be higher, investment costs will be passed directly to the consumer and, because the K factor in prices will reflect a basket of


charges, domestic consumers could end up subsidising industrial polluters. That is a long way from the principle that the polluter must pay.
The Government are interfering with market forces so that the industry will be more attractive to private investment. They are doing this in three ways. First, they are doing it with regard to debt write-off. We await the Minister's announcement, and if he does not intend to write off the debt, I hope that he will clarify the position by telling the House this evening that that is the case. The second way in which the Government intend to make this industry more attractive is by allowing higher prices once the industry is in the private sector, and by allowing cost pass through to the consumer. The third way in which they are making the industry attractive is by handing over to the private sector assets and powers that will inevitably be used against the public interest.
Looking again at the report of the stockbrokers and city analysts, one sees what they say of a private water industry:
Low increases in earnings per share, limited potential for growth in dividends, and a semi-static market do not, at first sight, suggest an exciting investment. This is not a view, though, which is likely to be shared by a number of potential predators. Any company that could optimise the use of a water authority's client base by using it to expand the market for its existing products, perhaps in a related field, stands to benefit significantly. Companies in the chemical waste disposal and heavy construction sectors might find particular attractions in bidding for privatised water industries.
There we have a summary of what this Bill is all about. The words of the City analysts are "potential predators". They are the people who have their eyes on this industry; they are the people who will make most out of it once it goes into the private sector.
We do not want to see, and the public do not want to see, a water industry that is owned by chemical companies and construction companies, yet these are the very companies identified by the City analysts as most likely to be interested in buying into this industry. If water companies are to be owned by chemical companies, and then those water companies are to contract out the analysis work of the NRA, the NRA will become a farce. The likes of Mr. Court of South West Water will be well on their way to achieving their objective of outwitting the regulators, and the chemical companies, or other polluting companies, will be well on their way to ensuring that the polluter does not pay.
Of course, there is also the land issue. Of the land, the city analysts say:
Water authorities with significant amounts of surplus land may well realise sizeable capital gains by selling it.
Of course, the new water plcs will be given that land when the industry is sold, so that they may realise those gains. To asset-strip and take the gain of the land values wherever possible is certainly the objective of those companies.
Another development has become clear—and I hope that the Minister will confirm the reports that have appeared in the press. It has become clear that the Government have decided to give important planning powers to the new water companies. These private companies will be able to decide whether a building development will have adequate water supply and sewerage facilities. How very convenient for the construction companies that buy up water companies and get 500,000 acres of land, much of it in areas of outstanding natural beauty. The construction companies

will decide land values and where development should take place. That is one of the reasons why the French are interested.
If the price of the industry when flotation takes place is low enough and if enough bribes are given, the water industry will be sold. If that happens, the consequences will be with us for many years to come. Fortunately, the public realise what this is all about. The public, like the Opposition, want a water industry that is accountable not to the shareholder but to the consumer. That is why they want us to vote against the Bill.

The Minister for Water and Planning (Mr. Michael Howard): One of the last points made by the hon. Member for Dewsbury (Mrs. Taylor) was typical of the Opposition's approach to the Bill. There is no truth whatever in her suggestion that the water companies will be given powers over development. The position will not change. The water companies will have a duty to provide infrastructure for development and they will have a right to be consulted, just as they have at the moment. That was an absolutely typical example of the way in which the Opposition have sought to mislead, exaggerate, scaremonger and play upon people's fears.

Mrs. Ann Taylor: Will the Minister give way?

Mr. Howard: No, I have already dealt with the hon. Lady's point.
The Bill has been discussed in Standing Committee and on the Floor of the House for over 187 hours. The last few hours have been as interesting as ever. I shall deal at the outset with another example of scaremongering by the hon. Member for Stalybridge and Hyde (Mr. Pendry). He suggested that, contrary to earlier assurances, workers in the industry will not be provided with a pension scheme that includes index-linking. That is not so. They will be entitled to terms, through the mirror image scheme, that will be exactly similar to those in the local government superannuation scheme. It will be at the same cost to employees and it will include index-linking. I hope that the hon. Gentleman will return to his sponsor, NUPE, and ask it to put the matter right and tell the truth to its members who are employees in the industry so that they are not misled.
In his interesting speech my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) based his opposition to our proposals on what he saw as the lack of competition in the industry. With respect to my hon. Friend, I think that he exaggerated the competition that exists in the telecommunications and gas industries and underestimated the extent to which the Director General of Water Services will be able, by comparing the performance of different companies in the water industry, to ensure that the standards of the most efficient spread to the rest of the industry and that the customers of the industry benefit from the greater efficiency. I am confident that in due course he will see the merit of what we are suggesting.
My hon. Friend the Member for Bury, North (Mr. Burt) again expressed his fears about disconnections. He expressed those fears many times in Committee. We are still considering his suggestion that disconnections should take place only after a court order. However, we have decided that the disconnections code should be subject to


the approval of the director general. That was one of the points in which he was interested. My hon. Friend the Member for Eddisbury (Mr. Goodlad) raised a number of interesting points, which we shall look at carefully.
My right hon. Friend the Member for Woking (Mr. Onslow) and my hon. Friends the Members for Devizes (Sir C. Morrison) and for Tiverton (Mr. Maxwell-Hyslop)—whose speech I was sorry to miss—expressed concern about the strength of powers and the independence of the National Rivers Authority. We shall take care to ensure that the National Rivers Authority is an independent body and that is has the powers that are in the Bill for all to see, as well as the resources that it needs to do its job properly.
I say to my right hon. Friend the Member for Woking that the National Rivers Authority has the duties for which he pressed. We think it right that it should have a discretion when it comes to decide to what extent it is appropriate to take samples, but its duties will be supervised by the Secretary of State, who can issue directions to the authority and whose exercise of that supervisory power is itself subject to supervision in the courts.
The National Rivers Authority is in many ways the cornerstone of our proposals, and it has presented Opposition Members with something of a quandary. It is so obviously a good idea, and so obviously a body that is badly needed that even Opposition Members have found it difficult to attack. Sometimes they have taken refuge in attacking not the proposals contained in the Bill but the proposals contained in the arrangements which were previously proposed for the industry and which were withdrawn by my right hon. Friend the Secretary of State.
Perhaps the true attitude towards the National Rivers Authority was let slip—as the true attitude of the Opposition so often is—by the hon. Member for Bootle (Mr. Roberts) when he was winding up our debate on 22 March. The hon. Gentleman sneeringly and derisively referred to a description of the National Rivers Authority provided by my right hon. and noble Friend Lord Crickhowell, who will be its first chairman. Lord Crickhowell had referred to the need to operate
a slim, efficient, cost conscious organisation".
To the hon. Gentleman and his hon. Friends that was a description worthy of derision. He would no doubt prefer a bloated, inefficient, extravagant organisation—an organisation of the kind which was so typical of the Opposition's years in government. Indeed, it was during those years that we saw the remarkable triple achievement of massive increases in water charges, massive increases in staff and a halving of capital investment in sewerage.

Mrs. Ann Taylor: On the specific point of the size and resources of the NRA, surely the Minister should support our earlier amendments which would have given the NRA sufficient resources and powers to do its job properly. If it is to be the slim organisation about which he spoke, that is why it has to contract out so much of its work back to the water plcs.

Mr. Howard: The hon. Lady has made that charge before; there is no substance to it. In eight of the 10 regions there will be no contracting out to laboratories. There will be no contracting out of sampling in any of the 10 regions

and we shall respect the safeguards that the National Rivers Authority advisory committee has put forward to safeguard its independence.
Of course, when pressed about the undoubted achievements and advantages of the Bill, Opposition Members say—this is the kernel and crux of the argument—that it is not necessary in order to achieve these advantages for the industry to be transferred to the private sector. All these advantages can be achieved, they say, while keeping it in the public sector.
This is a straightforward proposition. It is, moreover, a proposition which can be tested. It can be tested against the record of the Labour party when in Government; it can be tested against the record of this Government. What the Opposition have never done is to make it clear which, if either, of these tests gives them any confidence that the argument which they advance is a sound one. That argument can hardly be said, even by Opposition Members, to survive the test of the industry's performance while their party was in government.
We know—the figures are incontrovertible—that capital investment in the industy fell by one third during the Opposition's period in Government. Investment in sewage and sewerage services fell by no less than one half. That fall continued during the period when the right hon. and noble Lord Callaghan of Cardiff was Prime Minister in an Administration in which the hon. Member for Copeland (Dr. Cunningham) served successively as parliamentary private secretary to the Prime Minister and as a Parliamentary Under-Secretary at the Department of Industry.
One might have expected that those cuts would have been marked by great heart searching on the part of the Government who were responsible for them. It might have been expected that the most anxious consideration would be given to the effects of those cuts on our rivers, on our bathing waters and on our water environment generally. I turned for enlightenment to the autobiography of Lord Callaghan, so aptly entitled "Time and Chance". I turned to the index of the book. Do we find there page after page of reference to anguished discussions on the future of the water industry, and on the effects on the industry of those cuts? I fear not.
I looked under water; there was not a single reference. I looked under sewage and sewerage services; not a single reference. So far from being accompanied by a gnashing of teeth or a wringing of hands, or indeed any realisation of the damage that was being done to our water environment, those cuts were made without any mention, without any regret, without any realisation of the enormous damage that they would do.
I thought that perhaps the then Prime Minister was too busy on grander matters to have concerned himself with these minutiae, and I was anxious to be fair to the Labour party, so I turned to the memoirs of Lord Barnet, who was Chief Secretary at the time. I looked in the index of his book for a reference to water; there was not a single one. [Interruption.]

Mr. Speaker: Order.

Mr. Howard: I looked under sewerage services; there was not a single reference. But, to be fair to the right hon. Gentleman and the Labour party, there were some references which were relevant to this subject. There were three—[Interruption.]

Mr. Speaker: Order.

Mr. Boateng: On a point of order, Mr. Speaker. Can it possibly be in order for this tour around the memoirs of previous distinguished members of the Labour party to be made at this stage of the Bill? Is it any more in order——

Mr. Speaker: Order. What is being said is in order.

Mr. Howard: This is a test of the policy which the Labour party is putting forward. I found three references of some relevance to this matter in the memoirs of Lord Barnet under the heading "Water workers strike spy". On page 169 of the book, under the evocative chapter heading "Gloom and doom", we read:
There was unofficial action of a most damaging kind in the water industry, with many homes without water and elderly people having to use stand pipes.
That was what was happening in the water industry under the Labour party almost exactly 10 years ago.
If the Labour party's attitude does not pass that test, let me suggest another test to the Opposition. They can hardly say that they wish their policies to be subjected to a test of what has happened while the present Government have been in office. We say that matters have improved under the present Government, but——

Mr. Spearing: On a point of order, Mr. Speaker.

Mr. Speaker: Is it a point of order? Very well.

Mr. Spearing: Is it not a fact, Mr. Speaker, that the Third Reading debate is confined to the contents of the Bill?

Mr. Speaker: I think that the Minister is talking about the Bill.

Mr. Howard: What I am talking about is the policy which is at the heart of the Bill and the Labour party's opposition to that policy. Labour Members are advancing a policy which has consistently failed to give the people of this country the water environment to which they are entitled. It failed while the Labour party was in power and it has not done as well as it should have done while the present Government have been in power because the only way in which we can get the resources necessary to give this country the water environment it needs is by putting the industry in the private sector, and giving it access to private sector resources to enable it to operate with the efficiency which the private sector will provide. That is what the Bill provides. That is the only way in which we shall achieve the advantages that are so essential if we are to proceed with the clean-up of the water environment which all the people of our country wish to see.
The hon. Member for Copeland has repeatedly said that the Labour party will return the industry to the public sector. He does not seem to be in the confidence of his hon. Friend the Member for Dagenham (Mr. Gould) who keeps leaking to the newspapers the fact that the Labour party will not return the industry to the public sector. No doubt that is why the hon. Member for Copeland said that he was willing to set out all the answers to the questions that have been put. However, that will not be in this debate, but in a speech that he will make in a few weeks. He has not told the House the Opposition policy during our debates on the Bill but says that he will wait for a few weeks before doing so. That is a measure of the contempt with which the hon.

Gentleman treats the House. I invite the House to treat the Opposition tactics on the Bill with similar contempt and to give the Bill the Third Reading it so eminently deserves.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 319, Noes 227.

Division No. 137]
[10 pm


AYES


Adley, Robert
Day, Stephen


Aitken, Jonathan
Devlin, Tim


Alison, Rt Hon Michael
Dicks, Terry


Amery, Rt Hon Julian
Dorrell, Stephen


Amess, David
Douglas-Hamilton, Lord James


Amos, Alan
Dover, Den


Arbuthnot, James
Dunn, Bob


Arnold, Jacques (Gravesham)
Dykes, Hugh


Ashby, David
Eggar, Tim


Aspinwall, Jack
Emery, Sir Peter


Atkins, Robert
Evans, David (Welwyn Hatf'd)


Atkinson, David
Evennett, David


Baker, Rt Hon K. (Mole Valley)
Fairbairn, Sir Nicholas


Baker, Nicholas (Dorset N)
Fallon, Michael


Baldry, Tony
Favell, Tony


Banks, Robert (Harrogate)
Fenner, Dame Peggy


Batiste, Spencer
Field, Barry (Isle of Wight)


Bellingham, Henry
Finsberg, Sir Geoffrey


Bendall, Vivian
Fishburn, John Dudley


Bennett, Nicholas (Pembroke)
Forman, Nigel


Benyon, W.
Forsyth, Michael (Stirling)


Bevan, David Gilroy
Forth, Eric


Biffen, Rt Hon John
Fowler, Rt Hon Norman


Blackburn, Dr John G.
Fox, Sir Marcus


Blaker, Rt Hon Sir Peter
Franks, Cecil


Boscawen, Hon Robert
Freeman, Roger


Boswell, Tim
French, Douglas


Bottomley, Peter
Fry, Peter


Bottomley, Mrs Virginia
Gale, Roger


Bowden, A (Brighton K'pto'n)
Gardiner, George


Bowden, Gerald (Dulwich)
Garel-Jones, Tristan


Boyson, Rt Hon Dr Sir Rhodes
Gill, Christopher


Braine, Rt Hon Sir Bernard
Glyn, Dr Alan


Brandon-Bravo, Martin
Goodhart, Sir Philip


Brazier, Julian
Goodlad, Alastair


Bright, Graham
Goodson-Wickes, Dr Charles


Brown, Michael (Brigg &amp; Cl't's)
Gorman, Mrs Teresa


Bruce, Ian (Dorset South)
Gorst, John


Buck, Sir Antony
Gow, Ian


Budgen, Nicholas
Grant, Sir Anthony (CambsSW)


Burns, Simon
Greenway, Harry (Ealing N)


Burt, Alistair
Greenway, John (Ryedale)


Butcher, John
Gregory, Conal


Butterfill, John
Griffiths, Peter (Portsmouth N)


Carlisle, John, (Luton N)
Grist, Ian


Carlisle, Kenneth (Lincoln)
Ground, Patrick


Carrington, Matthew
Gummer, Rt Hon John Selwyn


Carttiss, Michael
Hague, William


Cash, William
Hamilton, Hon Archie (Epsom)


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Chapman, Sydney
Hampson, Dr Keith


Chope, Christopher
Hanley, Jeremy


Churchill, Mr
Hannam, John


Clark, Hon Alan (Plym'th S'n)
Hargreaves, A. (B'ham H'll Gr')


Clark, Dr Michael (Rochford)
Hargreaves, Ken (Hyndburn)


Clark, Sir W. (Croydon S)
Harris, David


Clarke, Rt Hon K. (Rushcliffe)
Haselhurst, Alan


Colvin, Michael
Hawkins, Christopher


Conway, Derek
Hayes, Jerry


Coombs, Anthony (Wyre F'rest)
Hayhoe, Rt Hon Sir Barney


Coombs, Simon (Swindon)
Hayward, Robert


Cormack, Patrick
Heathcoat-Amory, David


Couchman, James
Heseltine, Rt Hon Michael


Cran, James
Hicks, Mrs Maureen (Wolv' NE)


Critchley, Julian
Higgins, Rt Hon Terence L.


Currie, Mrs Edwina
Hill, James


Curry, David
Hind, Kenneth


Davies, Q. (Stamf'd &amp; Spald'g)
Hogg, Hon Douglas (Gr'th'm)


Davis, David (Boothferry)
Holt, Richard






Hordern, Sir Peter
Nicholson, Emma (Devon West)


Howard, Michael
Norris, Steve


Howarth, Alan (Strat'd-on-A)
Onslow, Rt Hon Cranley


Howarth, G. (Cannock &amp; B'wd)
Oppenheim, Phillip


Howe, Rt Hon Sir Geoffrey
Page, Richard


Howell, Rt Hon David (G'dford)
Paice, James


Howell, Ralph (North Norfolk)
Parkinson, Rt Hon Cecil


Hughes, Robert G. (Harrow W)
Patnick, Irvine


Hunt, David (Wirral W)
Patten, Chris (Bath)


Hunt, John (Ravensbourne)
Patten, John (Oxford W)


Hunter, Andrew
Pattie, Rt Hon Sir Geoffrey


Irvine, Michael
Pawsey, James


Irving, Charles
Porter, Barry (Wirral S)


Jack, Michael
Porter, David (Waveney)


Jackson, Robert
Portillo, Michael


Janman, Tim
Powell, William (Corby)


Johnson Smith, Sir Geoffrey
Price, Sir David


Jones, Gwilym (Cardiff N)
Raffan, Keith


Jones, Robert B (Herts W)
Raison, Rt Hon Timothy


Jopling, Rt Hon Michael
Rathbone, Tim


Kellett-Bowman, Dame Elaine
Redwood, John


Key, Robert
Renton, Tim


King, Roger (B'ham N'thfield)
Rhodes James, Robert


Kirkhope, Timothy
Riddick, Graham


Knapman, Roger
Ridley, Rt Hon Nicholas


Knight, Greg (Derby North)
Ridsdale, Sir Julian


Knight, Dame Jill (Edgbaston)
Rifkind, Rt Hon Malcolm


Knowles, Michael
Roberts, Wyn (Conwy)


Knox, David
Rossi, Sir Hugh


Lamont, Rt Hon Norman
Rost, Peter


Lang, Ian
Rowe, Andrew


Latham, Michael
Rumbold, Mrs Angela


Lawrence, Ivan
Ryder, Richard


Lee, John (Pendle)
Sackville, Hon Tom


Leigh, Edward (Gainsbor'gh)
Sayeed, Jonathan


Lennox-Boyd, Hon Mark
Scott, Nicholas


Lester, Jim (Broxtowe)
Shaw, David (Dover)


Lilley, Peter
Shaw, Sir Giles (Pudsey)


Lloyd, Sir Ian (Havant)
Shaw, Sir Michael (Scarb')


Lloyd, Peter (Fareham)
Shelton, Sir William


Lord, Michael
Shephard, Mrs G. (Norfolk SW)


Luce, Rt Hon Richard
Shepherd, Colin (Hereford)


Lyell, Sir Nicholas
Sims, Roger


McCrindle, Robert
Smith, Sir Dudley (Warwick)


Macfarlane, Sir Neil
Smith, Tim (Beaconsfield)


MacGregor, Rt Hon John
Soames, Hon Nicholas


MacKay, Andrew (E Berkshire)
Speller, Tony


Maclean, David
Spicer, Sir Jim (Dorset W)


McLoughlin, Patrick
Spicer, Michael (S Worcs)


McNair-Wilson, Sir Michael
Squire, Robin


McNair-Wilson, P. (New Forest)
Stanbrook, Ivor


Madel, David
Stanley, Rt Hon Sir John


Major, Rt Hon John
Steen, Anthony


Malins, Humfrey
Stern, Michael


Mans, Keith
Stevens, Lewis


Maples, John
Stewart, Allan (Eastwood)


Marlow, Tony
Stewart, Andy (Sherwood)


Marshall, John (Hendon S)
Stradling Thomas, Sir John


Martin, David (Portsmouth S)
Sumberg, David


Mates, Michael
Summerson, Hugo


Maude, Hon Francis
Tapsell, Sir Peter


Mayhew, Rt Hon Sir Patrick
Taylor, Ian (Esher)


Mellor, David
Taylor, John M (Solihull)


Miller, Sir Hal
Taylor, Teddy (S'end E)


Mills, Iain
Temple-Morris, Peter


Miscampbell, Norman
Thatcher, Rt Hon Margaret


Mitchell, Andrew (Gedling)
Thompson, D. (Calder Valley)


Mitchell, Sir David
Thompson, Patrick (Norwich N)


Moate, Roger
Thorne, Neil


Montgomery, Sir Fergus
Thornton, Malcolm


Morris, M (N'hampton S)
Thurnham, Peter


Morrison, Sir Charles
Townend, John (Bridlington)


Moss, Malcolm
Townsend, Cyril D. (B'heath)


Moynihan, Hon Colin
Tracey, Richard


Neale, Gerrard
Tredinnick, David


Nelson, Anthony
Trippier, David


Neubert, Michael
Trotter, Neville


Newton, Rt Hon Tony
Twinn, Dr Ian


Nicholls, Patrick
Vaughan, Sir Gerard


Nicholson, David (Taunton)
Viggers, Peter





Waddington, Rt Hon David
Wilkinson, John


Wakeham, Rt Hon John
Wilshire, David


Waldegrave, Hon William
Wolfson, Mark


Waller, Gary
Wood, Timothy


Walters, Sir Dennis
Woodcock, Mike


Ward, John
Yeo, Tim


Wardle, Charles (Bexhill)
Young, Sir George (Acton)


Warren, Kenneth
Younger, Rt Hon George


Watts, John



Wells, Bowen
Tellers for the Ayes:


Wheeler, John
Mr. Tony Durant and


Widdecombe, Ann
Mr. David Lightbown.


Wiggin, Jerry





NOES


Adams, Allen (Paisley N)
Duffy, A. E. P.


Allason, Rupert
Dunnachie, Jimmy


Allen, Graham
Dunwoody, Hon Mrs Gwyneth


Alton, David
Eadie, Alexander


Archer, Rt Hon Peter
Eastham, Ken


Armstrong, Hilary
Evans, John (St Helens N)


Ashley, Rt Hon Jack
Ewing, Harry (Falkirk E)


Ashton, Joe
Ewing, Mrs Margaret (Moray)


Banks, Tony (Newham NW)
Fatchett, Derek


Barnes, Harry (Derbyshire NE)
Faulds, Andrew


Barnes, Mrs Rosie (Greenwich)
Fearn, Ronald


Barron, Kevin
Field, Frank (Birkenhead)


Battle, John
Fields, Terry (L'pool B G'n)


Beaumont-Dark, Anthony
Fisher, Mark


Beckett, Margaret
Flannery, Martin


Beith, A. J.
Flynn, Paul


Bell, Stuart
Foot, Rt Hon Michael


Benn, Rt Hon Tony
Foster, Derek


Bennett, A. F. (D'nt'n &amp; R'dish)
Foulkes, George


Bermingham, Gerald
Fraser, John


Bidwell, Sydney
Fyfe, Maria


Blair, Tony
Galbraith, Sam


Blunkett, David
Galloway, George


Boateng, Paul
Garrett, John (Norwich South)


Boyes, Roland
Garrett, Ted (Wallsend)


Bradley, Keith
Godman, Dr Norman A.


Bray, Dr Jeremy
Golding, Mrs Llin


Brown, Gordon (D'mline E)
Gould, Bryan


Brown, Nicholas (Newcastle E)
Graham, Thomas


Brown, Ron (Edinburgh Leith)
Grant, Bernie (Tottenham)


Bruce, Malcolm (Gordon)
Griffiths, Nigel (Edinburgh S)


Buchan, Norman
Griffiths, Win (Bridgend)


Buckley, George J.
Grocott, Bruce


Caborn, Richard
Hardy, Peter


Callaghan, Jim
Harman, Ms Harriet


Campbell, Menzies (Fife NE)
Heffer, Eric S.


Campbell, Ron (Blyth Valley)
Henderson, Doug


Campbell-Savours, D. N.
Hinchliffe, David


Cartwright, John
Hogg, N. (C'nauld &amp; Kilsyth)


Clark, Dr David (S Shields)
Holland, Stuart


Clarke, Tom (Monklands W)
Home Robertson, John


Clay, Bob
Hood, Jimmy


Clelland, David
Howarth, George (Knowsley N)


Clwyd, Mrs Ann
Howell, Rt Hon D. (S'heath)


Cohen, Harry
Howells, Geraint


Coleman, Donald
Howells, Dr. Kim (Pontypridd)


Cook, Robin (Livingston)
Hoyle, Doug


Corbett, Robin
Hughes, John (Coventry NE)


Corbyn, Jeremy
Hughes, Robert (Aberdeen N)


Cousins, Jim
Hughes, Sean (Knowsley S)


Cox, Tom
Hughes, Simon (Southwark)


Crowther, Stan
Illsley, Eric


Cryer, Bob
Ingram, Adam


Cummings, John
Janner, Greville


Cunliffe, Lawrence
Johnston, Sir Russell


Cunningham, Dr John
Jones, Barry (Alyn &amp; Deeside)


Dalyell, Tam
Jones, Ieuan (Ynys Môn)


Darling, Alistair
Jones, Martyn (Clwyd S W)


Davies, Rt Hon Denzil (Llanelli)
Kennedy, Charles


Davies, Ron (Caerphilly)
Kilfedder, James


Dewar, Donald
Kinnock, Rt Hon Neil


Dixon, Don
Kirkwood, Archy


Dobson, Frank
Lambie, David


Doran, Frank
Leadbitter, Ted


Douglas, Dick
Leighton, Ron






Lewis, Terry
Rees, Rt Hon Merlyn


Litherland, Robert
Richardson, Jo


Livingstone, Ken
Roberts, Allan (Bootle)


Livsey, Richard
Robertson, George


Lloyd, Tony (Stretford)
Robinson, Geoffrey


Lofthouse, Geoffrey
Rogers, Allan


Loyden, Eddie
Rooker, Jeff


McAllion, John
Ross, Ernie (Dundee W)


McAvoy, Thomas
Ruddock, Joan


Macdonald, Calum A.
Salmond, Alex


McFall, John
Sedgemore, Brian


McKay, Allen (Barnsley West)
Sheerman, Barry


McKelvey, William
Sheldon, Rt Hon Robert


McLeish, Henry
Shore, Rt Hon Peter


Maclennan, Robert
Skinner, Dennis


McWilliam, John
Smith, Andrew (Oxford E)


Madden, Max
Smith, C. (Isl'ton &amp; F'bury)


Mahon, Mrs Alice
Smith, Sir Cyril (Rochdale)


Marek, Dr John
Smith, Rt Hon J. (Monk'ds E)


Marshall, David (Shettleston)
Snape, Peter


Marshall, Jim (Leicester S)
Soley, Clive


Martlew, Eric
Spearing, Nigel


Maxton, John
Steel, Rt Hon David


Maxwell-Hyslop, Robin
Steinberg, Gerry


Meacher, Michael
Stott, Roger


Michael, Alun
Strang, Gavin


Michie, Bill (Sheffield Heeley)
Straw, Jack


Michie, Mrs Ray (Arg'l &amp; Bute)
Taylor, Mrs Ann (Dewsbury)


Mitchell, Austin (G't Grimsby)
Taylor, Matthew (Truro)


Morgan, Rhodri
Thompson, Jack (Wansbeck)


Morley, Elliott
Turner, Dennis


Morris, Rt Hon J. (Aberavon)
Vaz, Keith


Mowlam, Marjorie
Wall, Pat


Mudd, David
Wallace, James


Mullin, Chris
Walley, Joan


Murphy, Paul
Wardell, Gareth (Gower)


Nellist, Dave
Welsh, Andrew (Angus E)


O'Brien, William
Welsh, Michael (Doncaster N)


O'Neill, Martin
Wigley, Dafydd


Orme, Rt Hon Stanley
Williams, Rt Hon Alan


Parry, Robert
Williams, Alan W. (Carm'then)


Patchett, Terry
Winnick, David


Pendry, Tom
Winterton, Nicholas


Pike, Peter L.
Worthington, Tony


Powell, Ray (Ogmore)
Wray, Jimmy


Prescott, John
Young, David (Bolton SE)


Primarolo, Dawn



Quin, Ms Joyce
Tellers for the Noes:


Radice, Giles
Mr. Frank Haynes and


Randall, Stuart
Mr. Robert N. Wareing.


Redmond, Martin

Question accordingly agreed to.

Bill read the Third time, and passed.

BUSINESS OF THE HOUSE

Resolved,
That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.—[Mr. Garel-Jones.]

Electricity Bill [Money] (No. 2)

Queen's recommendation having been signified—

Motion made and Question proposed,
That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise—
(1) the payment out of the National Loans Fund of any sums required by the Secretary of State for making loans to successor companies in England and Wales which are for the time being wholly owned by the Crown, so long as the aggregate of any amounts outstanding by way of principal in respect of such loans and sums issued out of the Consolidated Fund for fulfilling guarantees given by the Treasury in respect of sums borrowed by such companies from persons other than the Secretary of State shall not exceed £2,000 million;
(2) the payment out of the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given by them in respect of sums borrowed from persons other than the Secretary of State by successor companies in England and Wales which are for the time being wholly owned by the Crown.
In this resolution "successor company" has the same meaning as in Part II of that Act.—[Mr. Norman Lamont.]

Mr. Bob Cryer: I am very grateful to you, Mr. Speaker, for giving me the opportunity of raising a number of questions about this money resolution, because I think the procedures of the House are remiss in one or two circumstances. One is in examining statutory instruments and the other is in examining the enormous sums of money which this House authorises. I have a number of questions, which I hope the Minister is briefed to take account of. The first is that paragraph (1) of the money resolution suggests that the payment out of the national loans fund can be made to successive companies in England and Wales, for the time being wholly owned by the Crown, up to a total of £2 billion. That is an enormous sum of money and I would be pleased to learn the terms of that loan from the Minister.
I imagine that the purpose of this money resolution is to take account of questions that have arisen in Committee, because the first money resolution does not cover expenditure which the Government now feel is required. The expenditure that we are considering is of some £2,000 million by way of loan. Will that loan be open-ended? I imagine that it will be subject to the Treasury's consent. What terms and conditions will the Treasury lay down?
Can the Minister clarify the position? Is this a way of handing over up to £2,000 million to the corporations which are, for the time being, wholly owned by the Crown, before they are taken over by successor companies—in effect, handing over this enormous sum of taxpayers' money direct to the Government's cronies who will purchase the electricity generating companies?
I am wholly opposed to the privatisation of the electricity industry.

Mr. Denis Skinner: What sum are we talking about?

Mr. Cryer: We are not talking about a supplement of 2 per cent. or 3 per cent. to recipients of supplementary benefit; or the purchase of the House of Fraser. That could be bought three times with this amount. We are talking about £2,000 million.

Mr. Skinner: My hon. Friend is marginally wrong. The House of Fraser was not bought with real money. According to the report issued by the Department of


Trade and Industry, which has not been released to the public, it was purchased through fraud and deceit with what it called funny money.

Mr. Cryer: I am grateful to my hon. Friend. The Government have been giving licence to such tactics in the City. The Secretary of State for Trade and Industry suggests that the report has been withheld from publication to avoid any difficulties in prosecution, but I think that it is because the Government want to cover the whole thing up. In this enterprise culture, large chunks of public assets are being taken from the public. The public are being robbed by this procedure. Assets are being taken from the citizenry and handed over to a clique of the Government's cronies. In those circumstances, it behoves Parliament to know exactly what conditions will be laid down for this loan of £2,000 million.
We have heard before from Department of Trade and Industry reports about loans from company directors to associated companies in which no time limits have been laid down for the repayment of loans. They have been open-ended. I want an assurance from the Government that the loans will be properly laid out, with arrangements for repayment. I want an assurance that we will not have another Blue Arrow situation, with virtually open-ended loans. I want an assurance that the taxpayer will not be left empty-handed as a result of the authorisation of this £2,000 million loan tonight.
I hope that the Minister can give me such an assurance. I am sure that he will agree that, in this enterprise culture, private firms must stand on their own feet and not be feather-bedded by loans of £2,000 million from the taxpayer. I take it that all the Government's cronies who are buying these companies are sturdy entrepreneurs who, if they were offered £2,000 million in loans from the taxpayer, would reject it as out of line with their philosophy.

Mr. Skinner: Some privatisation deals did not work out in the way that the Government anticipated. In the beginning—with British Gas, and so on—it was easy, but my hon. Friend will recall that in the case of British Petroleum, the Government underwrote the shares, with the result that the Kuwait Investment Office started buying most of BP. The Government became scared and said, "Just a minute. All of BP is being bought by people who are friends of the A1-Fayeds, who bought the House of Fraser." Consequently, the Government stepped in and asked, "Can we have those shares back? We shall give you more money to take them off your hands." It could be that the £2,000 million is only a tiny proportion of what might eventually materialise.

Mr. Cryer: My hon. Friend suggests that both the Government and private entrepreneurs can be greedy, unprincipled and unscrupulous. That takes my breath away. There is a suggestion that the Government are using £2,000 million of taxpayers' money when they claim that they are the guardian of the taxpayers' money. I want a complete and adequate explanation of why it is that that £2,000 million is needed.
I see the Chief Secretary to the Treasury sitting smugly on the Government Front Bench, apparently viewing with equanimity the disappearance of £2,000 million in loans in pursuit of privatisation. Yesterday, I visited one of the

schools in my constituency where a temporary classroom in the schoolyard has been temporary so long that its plywood panels are warping off. That school has been waiting for a new classroom for two years, yet a £2,000 million loan cannot be found to improve schools across the length and breadth of the country. Nevertheless, £2,000 million can be found to facilitate the handing over of publicly owned assets to the Government's cronies. The Government's priorities need some explaining.

Mr. Skinner: The privatisation of electricity takes account of nuclear power. In order to sell off the nuclear ingredient, the Government have had to wrap it up in coal. It is ironic that the Government are running down the coal industry but cannot sell off nuclear shares on their own, but must cover them up with coal. Consequently, the Government may not be able to sell those shares as well as they thought. Many people will fight shy of buying nuclear shares, even if they are wrapped in coal. The Government need that £2,000 million because they are not sure how well they can sell those shares.
In charge is a Minister who could not even sell computers to the Conservative Party. They all broke down. The entire Tycom computer network serving the Tory constituency parties could not be made to operate, and the whole firm went bankrupt. One can understand why this latest measure is costing the country £2,000 million.

Mr. Cryer: I am grateful to my hon. Friend for his illuminating comments. He makes a relevant point. One questions whether that £2,000 million is a form of subsidy from a Government who oppose the principle of subsidies. As my hon. Friend says, the cost of nuclear power is enormous. The nation has been cheated. We were told by the overpaid decision makers in the electricity generating industry that nuclear power would be cheaper. It has turned out that that is not the case.
We cannot calculate the precise cost of decommissioning a nuclear power station, so we are faced with expenditure of several thousand million pounds just for decommissioning. The Secretary of State for Energy is here. If he has any hard facts that he can contribute to the discussion on the cost of decommissioning, I would be happy to hear his comments. But, of course, he has none: they are entirely unknown.
It may well be that the Minister wants this authorisation in order to hand over £2 billion to help the privatised industry to embark on the decommissioning process. I have been asking a few questions about decommissioning and the cost of running nuclear power stations, the cost of repairs and percentage availability; and it is a pretty appalling story. Yet the Government are proposing privatisation.
In view of Three Mile Island and the fact that the American nuclear power industry has not commissioned a new nuclear power generating plant since before Three Mile Island, because of the enormous cost of investment in nuclear power, it may well be that the sort of money that is being authorised here is to cushion the privatisation process and lure the shareholders into taking up the option the Government are providing. If they do not, the Government and, in particular, the Secretary of State for Energy, will be shown to be as dismal failures as we believe them to be and their policies the disaster that we know them to be.

Mr. John Maxton: My hon. Friend will be aware that, while this money resolution talks about £2,000 million, the Bill itself, particularly paragraph 88 of schedule 12, shows that the Secretary of State has the ability to write off any debt that is incurred up to the point of privatisation. This may not, therefore, be a £2,000 million loan at all; it may be a £2,000 million gift.

Mr. Cryer: That is a very interesting observation by my hon. Friend. I was coming to paragraph 88 of schedule 12 in a moment, but he has anticipated my remarks. There is, however, a second section of the resolution which refers to guarantees by the Treasury in respect of loans, and paragraph 88 of schedule 12 also impinges on this.
I should be very interested to learn from the Minister what sort of guarantees the Treasury will give. Will they be open-ended guarantees in which they hand over a guarantee against borrowing to the privatised companies through the successor companies? Will the successor companies carry with them from the companies which are, for the time being, under this resolution, wholly owned by the Crown, the Treasury guarantees in addition to the loans? Once the companies that are wholly owned by the Crown have been wound up and have disappeared, and once the successor companies have taken over, what is the position with regard to, first of all, loans under paragraph (1) of the resolution and, second, the guarantees under paragraph (2)?
We should be very wary of guarantees given by the Government on behalf of the taxpayers, because they amount to a guarantee that payment will be made by the taxpayers if there is a default on a repayment. That is surely something that we should look at. After all, when constituency Members like myself ask the Government for more money to provide better payments for people who are at the very poorest end of the scale, the Government say that they cannot afford it because it would cost another £10 million, £15 million or £20 million a year. So they cannot give family credit on a better basis or transitional payments for pensioners, which would be the guarantee after the cuts on 11 April last year—the new, savage cuts because the Government were short of money. They could not provide transitional payments very effectively.
One of my constituents, indeed, is still waiting for payment, having applied a year ago. It seems that, while the ordinary citizen has considerable difficulty in getting a few hundred quid out of the Government, a successor company may have its pockets lined with £2 billion-worth of loans and some guarantees as well.
It is not the first time that this has happened. British Leyland was sold off to British Aerospace—a company with assets worth some £750 million—for £150 million, and BAe was given £500 million to put in its pocket.

Mr. Skinner: They did it with Harland and Wolff, too.

Mr. Cryer: They have done exactly the same with Harland and Wolff.

Mr. Skinner: But not Sunderland.

Mr. Cryer: Not Sunderland. They are quite happy to see 2,000 workers there shoved on the scrapyard and into the dole queue.
It is worth pointing out that £2,000 million was put into British Leyland by successive Governments to retain jobs

and an indigenous motor vehicle industry. It is important to raise such questions in the light of the £2,000 million mentioned in the resolution.

Mr. David Ashby: Can the hon. Gentleman equate that with the £4 million a day that was poured into British Coal under the Labour Government?

Mr. Cryer: I have always thought that an economy should aim to provide the community at large with resources, including the provision of work. Between 1974 and 1979, the Labour Government used their best endeavours to provide work. During their 10 years in office, the present Government have never achieved the low level of unemployment that they inherited. It has been higher each year. The truth is that they do not care about shoving people on to the dole.

Mr. Skinner: When hon. Members start talking about subsidies, they cannot travel much further than the subsidies to the Common Market and the common agricultural policy. My hon. Friend knows a bit about that. He knows that £16 a week for every family in Britain goes in subsidy to prop up the West German farmers and the rest of them. We have now discovered that some £6,000 million-worth of fraud—three times as much as the figure in the resolution——

Mr. Deputy Speaker (Sir Paul Dean): Order. I am sure that the hon. Gentleman will not be deflected from the money resolution.

Mr. Skinner: When we talk about money and subsidies—like the £2,000 million referred to here as "loans"—let us think about what we could do with it to provide security for the railways and airports: the sort of security that the Prime Minister was given when she went up to Scarborough. If there was any left over, we could give it to the pensioners and the National Health Service.

Mr. Cryer: I am grateful to my hon. Friend for Ins contribution. There is a legitimate argument for subsidies to retain jobs. The present Government use that argument in Northern Ireland. Because, they say, it is an area of high unemployment and because there is strife and trouble there, Northern Ireland has the highest level of subsidy per job in the United Kingdom. The argument adduced by the hon. Member for Leicestershire, North-West (Mr. Ashby) that subsidy is somehow wrong is simply not based on facts. If I recall correctly, the hon. Gentleman is something of a Euro-fanatic. I am not absolutely sure, because many Tory Members are very similar: they are clones, and it is sometimes hard to distinguish one from another.
The £2,000 million-worth of loans and guarantees is not specified in the resolution, but payment may be made
out of the Consolidated Fund for fulfilling guarantees given by the Treasury in respect of sums borrowed … from persons other than the Secretary of State".
So they are getting £2 billion-worth of loans from the Secretary of State and guarantees for loans from other institutions.
The Government, who are giving potential subsidies to their cronies whom they hope to persuade to buy the publicly funded electricity generating industry, have given between 1984 and 1987 a total of £4·7 billion to the Common Market, yet they claim to be against subsidies.
Local authorities go cap in hand trying to get back a tiny fraction of that sum, most of which, as my hon. Friend


the Member for Bolsover (Mr. Skinner) pointed out, went to the farming community, including to cereal farmers in this country. When I see the serried ranks of the Tory party standing up and criticising farmers for receiving subsidies, then I will know that there has been a change of heart on their part.

Mr. Ashby: If the hon. Gentleman is not opposed to the provision of money to provide jobs, why is he opposing this Bill?

Mr. Cryer: Is the hon. Gentleman seriously suggesting that privatisation will create more jobs? The only jobs that this measure will create will be in the advertising agencies used by the Government, in the finance houses which facilitate the placing of shares and in the paper chase that will occur in the City, although the number of jobs so created will be but a fraction of the number of jobs that have been lost in the City. But no real jobs will be created in genuine services that ordinary people can use. Every privatisation has started with claims of rationalisation but has ended with more people being put on the dole.

Mr. Rhodri Morgan: I confirm what my hon. Friend says about job losses arising from privatisation. Indeed, 85 jobs have disappeared in the past week through a voluntary redundancy scheme at Aberthaw A and B power station, the main power station in south Wales.

Mr. Cryer: Society must provide an opportunity for people to train and improve and a chance for our young people to find jobs. The money that is being provided under this measure could be used, for example, to improve import facilities at docks so that cheap coal from South Africa, brought out of that country on the bloody backs of black miners——

Mr. Ashby: Oh, dear.

Mr. Cryer: It is all very well for Conservative Members to make such remarks, but, then, some of them will have been on free trips to Namibia and South Africa, paid for by the propaganda merchants in the South African Government.
We are concerned at the thought that the British Government have been deliberately planning to destroy village communities around the pits in every major region in this country as part of a planned vendetta against the coal industry and the NUM. The Government's cronies, who share their vindictive and nasty values, would not hesitate to import coal from anywhere that people are exploited if that would make the electricity generating industry what they call competitive. The publicly owned electricity generating industry is competitive and well organised. As a matter of fact, that was recognised in the 1920s: the standardised electricity generating system and the national grid were actually introduced by Conservative Governments, who recognised the virtue of public ownership.
Of course, this Government recognise the virtue of public ownership in the case of certain public services. For instance, they have not yet arranged to sell the Army off to Securicor. If the standard of competitive endeavour is good enough for the electricity industry, why not for the Royal Air Force? Why should not the RAF be sold off to

British Midland and the Royal Navy to P and O? After all, P and O is one of the great heroes of the Conservative party, and it pours money into the Conservative coffers. Do not the Government think that that company could run the Navy better, or is it just that a public service provides a more effective and efficient defence of this country?

Mr. Skinner: My hon. Friend is moving into an area of privatisation based on what could happen next. He has referred to the armed forces. Is he aware that the Government have already made inroads into the police in that respect? They have introduced an element of privatisation in respect of people being transported from remand centres and so on. As a result, a police review that is given to every Member of Parliament—unlike the Department of Trade and Industry report on the selling off of Harrods—shows that the police are seething because they realise that this is a dilution of their jobs. Now the Police Federation is supposed to be taking——

Mr. Deputy Speaker: Order. I am sure that the hon. Member for Bradford, South (Mr. Cryer) will stick to the money resolution.

Mr. Cryer: I am very grateful to my hon. Friend the Member for Bolsover (Mr. Skinner) for illuminating the debate once again with a very apt comment. We are talking about £2,000 million in loans and, in addition, open-ended guarantees for loans from sources other than the Treasury. This is a very important matter.
Conservative Members claim that there is no particular virtue in public ownership. All that I am saying—in a very brief and reasonable way—by way of explanation, is that the Government are not selling off the Navy, the Army and the Air Force. That must be because they see virtue in public ownership of those forces. Labour Members say that public ownership is an important principle, and that it is a disgrace that public assets are being sold off and put beyond the control of this House.

Mr. Alex Salmond: If the armed forces were put out for privatisation, or to competitive tendering, would the hon. Member care to speculate what the Government's attitude would be were the Red Army to put in the lowest tender?

Mr. Deputy Speaker: Order. I am sure that, again, the hon. Member for Bradford, South will not be tempted to answer a question which is well away from the money resolution.

Mr. Cryer: What I am concerned about, as you, Mr. Deputy Speaker, rightly imply, is this £2,000 million by way of loan that British citizens are handing over to some corporations wholly owned by the Crown. We want to know what will be done with this money when the successor companies take over and follow the evil pattern of this Government. The Government have announced that when an organisation is put out to tender, by and large it is sold to any comer. So my hon. Friend's illustration is very neat: if the Army were to be sold off, we could get Russian domination by another route. That is something that I did not think of when the Government spent £11,000 million on Trident nuclear weapons to deal with the very sort of domination that they could let in by the back door—by selling off the Army.
There is also the question of control. The Minister is making notes and civil servants are ready to provide him with additional information about the issues that we have raised. When the successor companies take over, all that will disappear. It will become a Treasury matter. Ministers will not have to sit here listening to speeches by me and other Opposition Members. Public accountability will be removed. That is wrong.
Even with a publicly owned electricity industry, the position is unsatisfactory. If we table parliamentary questions, we are told that they have been forwarded to the chairman of the CEGB, and we get a letter from a public relations merchant who says that nuclear power is not quite so expensive as it seems; it is just that we have been spending an enormous amount of money on it. That is not good enough, even in today's terms.
After privatisation we shall be unable to ask questions about the successor companies that are mentioned in the resolution. When loans are given not to the wholly owned corporation but to the successor companies, parliamentary questions about those companies will not be answered in full by Ministers. The purpose of successor companies is to remove public accountability. The spivs and crooks who rule in the City with such seedy generosity towards the Conservative party are thought by the Government to be fit people to take over this enormous industry that is so crucial to the people of this country. Townsend Thoresen directors may become directors of the successor companies. They could be steering the nuclear ship to Zeebrugge, with disastrous consequences for us all.

Mr. Frank Haynes: My hon. Friend will be aware that foreigners will be allowed to buy into our electricity industry. They too will enjoy this subsidy. Is my hon. Friend also aware that some of those foreigners could be put up as a front to buy into the industry? A foreign country that supported terrorism could end up in possession of a nuclear power station. How about that?

Mr. Cryer: I am alarmed about it. There have been lots of links between private enterprise companies and Colonel Gaddafi. My hon. Friend the Member for Bolsover will recall the vitriolic criticism that money was being collected in Libya for the miners. There was a torrent of abuse, yet the Government appear to be opening the door to Libyans to buy into the industry.
I make no distinction between British people and foreigners, but I am concerned about capitalists, wherever they come from, getting hold of a public asset. In the words of the people who sold shares in the 1956 bank rate leak scandal, it is anti-British and derogatory to sterling, but it makes sense to me. They are the people who wrap themselves in the Union Jack and sell Britain down the river, if they think that they can make more money out of it.
The Minister has some questions to answer about the resolution. I do not intend to take up too much time because I want to give the Minister time in which to respond to the debate. I remind the House that as this legislation continues down its slimy path through Parliament, its disreputable origins and aims mean that the opportunities for Members to ask these questions are diminishing all the time.

Mr. Malcolm Bruce: rose——

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): rose——

Mr. Deputy Speaker (Sir Paul Dean): Mr. Michael Spicer.

Mr. Spicer: The hon. Member for Bradford, South (Mr. Cryer) has made his traditional money resolution speech for which he is in the process of making himself world famous——

Mr. Malcolm Bruce: On a point of order, Mr. Deputy Speaker. It is not customary to allow hon. Members who wish to speak to do so before the Minister speaks, so that he can answer their questions?

Mr. Deputy Speaker: The Minister has risen, and I have called him.

Mr. Spicer: As I understand it, I have only just over sot minutes in which to answer the questions, to which the House deserves at least some sort of answer——

Mr. Malcolm Bruce: Further to the point of order, Mr. Deputy Speaker. I seek your ruling. I had understood that it was normal practice to allow hon. Members who rise to speak in a debate to be heard, and to call the Minister last——

Mr. Deputy Speaker: Order. The normal practice is that if a Minister rises, he is called by the Chair. The House must bear in mind the fact that time is now very limited.

Mr. Spicer: Perhaps I can help the hon. Member for Gordon (Mr. Bruce) by letting him intervene in my speech, although that will take some lime out of it. I feel that, as the hon. Member for Bradford, South spoke for 40 minutes or so, I should give him the answer he is looking for.
The hon. Member for Bradford, South was right about one thing: the resolution enables the provision of an upper limit on the industry's borrowing of £2,000 million while it remains in the public sector. But I thought that the hon. Gentleman missed something. He talked about the Government giving the money away to their cronies, by which I imagine he meant ultimately the British people. That is his definition of privatisation, not mine.
The hon. Gentleman asked why the figure is £2,000 million. The best way to answer that is to remind him that the latest published figure for the industry's borrowings is £1·6 billion, so the £2 billion must be seen in that context. I cannot refrain from reminding hon. Members who served on the Standing Committee on the Electricity Bill that some of them had reservations at that stage about whether we had provided for adequate borrowing during the period before the industry is privatised.

Mr. Malcolm Bruce: The fundamental question to which the House is entitled to know the answer is what has happened since Second Reading to warrant the measure before the House. After Second Reading the House voted for a money resolution of £6 billion, although my party voted against it and will vote against this one. What has happened to justify the authorisation of £2 billion more borrowing in this short space of time?

Mr. Spicer: One of the things that has happened is that we have decided that the industry in England and Wales shall be able to borrow with Treasury guarantees. That is


connected with the fact that we shall allow the industry to borrow short in order to re-finance the long-term borrowing that we shall insist it pays back. We shall discuss that under the ways and means motion.
Another aspect that was openly discussed in Committee, and to which I alerted it, is that as we approach the vesting of these companies, estimates of borrowing become much clearer. The moneys are comparable with existing borrowing levels. To answer the hon. Member for Bradford, South, the borrowing will be subject to Treasury consent. It will cease—the hon. Gentleman did not appear to take this on board—on flotation of the companies in the private sector. The Treasury guarantees, also covered by the resolution, will cease when the successor companies are floated.
I wanted to intervene to answer those specific points raised by the hon. Gentleman. There is nothing untoward about the money resolution. It provides for moneys absolutely in line with the present borrowing of the industry within the public sector. How the hon. Gentleman can make a 35 to 40-minute speech relating this to his prejudices about privatisation I am not quite sure, but I certainly wish to commend the resolution.

Question put:

The House divided: Ayes 185, Noes 57.

Division No. 138]
[11.00 pm


AYES


Aitken, Jonathan
Fallon, Michael


Alison, Rt Hon Michael
Favell, Tony


Allason, Rupert
Fenner, Dame Peggy


Amess, David
Fishburn, John Dudley


Amos, Alan
Forman, Nigel


Arbuthnot, James
Forsyth, Michael (Stirling)


Arnold, Jacques (Gravesham)
Forth, Eric


Ashby, David
Fox, Sir Marcus


Atkinson, David
Freeman, Roger


Baker, Nicholas (Dorset N)
French, Douglas


Baldry, Tony
Fry, Peter


Batiste, Spencer
Gale, Roger


Bennett, Nicholas (Pembroke)
Garel-Jones, Tristan


Bevan, David Gilroy
Gill, Christopher


Blackburn, Dr John G.
Goodson-Wickes, Dr Charles


Blaker, Rt Hon Sir Peter
Gorst, John


Boscawen, Hon Robert
Gow, Ian


Boswell, Tim
Grant, Sir Anthony (CambsSW)


Bottomley, Peter
Greenway, John (Ryedale)


Brandon-Bravo, Martin
Gregory, Conal


Brazier, Julian
Griffiths, Peter (Portsmouth N)


Bright, Graham
Grist, Ian


Brown, Michael (Brigg &amp; Cl't's)
Ground, Patrick


Buck, Sir Antony
Gummer, Rt Hon John Selwyn


Butterfill, John
Hague, William


Carlisle, John, (Luton N)
Hamilton, Hon Archie (Epsom)


Carlisle, Kenneth (Lincoln)
Hamilton, Neil (Tatton)


Carrington, Matthew
Hanley, Jeremy


Carttiss, Michael
Hannam, John


Chapman, Sydney
Hargreaves, A. (B'ham H'll Gr')


Chope, Christopher
Hargreaves, Ken (Hyndburn)


Clarke, Rt Hon K. (Rushcliffe)
Harris, David


Conway, Derek
Hawkins, Christopher


Coombs, Anthony (Wyre F'rest)
Hayes, Jerry


Currie, Mrs Edwina
Hayhoe, Rt Hon Sir Barney


Davies, Q. (Stamf'd &amp; Spald'g)
Hayward, Robert


Davis, David (Boothferry)
Heathcoat-Amory, David


Day, Stephen
Hind, Kenneth


Devlin, Tim
Howarth, Alan (Strat'd-on-A)


Douglas-Hamilton, Lord James
Howarth, G. (Cannock &amp; B'wd)


Dunn, Bob
Hunt, David (Wirral W)


Durant, Tony
Hunt, John (Ravensbourne)


Evennett, David
Hunter, Andrew


Fairbairn, Sir Nicholas
Irvine, Michael





Jack, Michael
Riddick, Graham


Jackson, Robert
Rifkind, Rt Hon Malcolm


Janman, Tim
Roberts, Wyn (Conwy)


Johnson Smith, Sir Geoffrey
Rossi, Sir Hugh


Jones, Gwilym (Cardiff N)
Rowe, Andrew


Jones, Robert B (Herts W)
Rumbold, Mrs Angela


King, Roger (B'ham N'thfield)
Ryder, Richard


Knight, Greg (Derby North)
Sayeed, Jonathan


Knight, Dame Jill (Edgbaston)
Shaw, David (Dover)


Knowles, Michael
Shaw, Sir Michael (Scarb')


Lang, Ian
Shephard, Mrs G. (Norfolk SW)


Latham, Michael
Shepherd, Colin (Hereford)


Lawrence, Ivan
Smith, Tim (Beaconsfield)


Leigh, Edward (Gainsbor'gh)
Soames, Hon Nicholas


Lennox-Boyd, Hon Mark
Speed, Keith


Lester, Jim (Broxtowe)
Speller, Tony


Lightbown, David
Spicer, Michael (S Worcs)


Lilley, Peter
Squire, Robin


Lloyd, Peter (Fareham)
Stern, Michael


Lord, Michael
Stevens, Lewis


Lyell, Sir Nicholas
Stewart, Allan (Eastwood)


Maclean, David
Stewart, Andy (Sherwood)


McLoughlin, Patrick
Stradling Thomas, Sir John


Mans, Keith
Summerson, Hugo


Marshall, John (Hendon S)
Taylor, Ian (Esher)


Martin, David (Portsmouth S)
Taylor, John M (Solihull)


Maude, Hon Francis
Taylor, Teddy (S'end E)


Maxwell-Hyslop, Robin
Thatcher, Rt Hon Margaret


Mayhew, Rt Hon Sir Patrick
Thompson, D. (Calder Valley)


Miller, Sir Hal
Thompson, Patrick (Norwich N)


Mills, Iain
Thurnham, Peter


Mitchell, Andrew (Gedling)
Trippier, David


Mitchell, Sir David
Trotter, Neville


Montgomery, Sir Fergus
Twinn, Dr Ian


Morris, M (N'hampton S)
Waddington, Rt Hon David


Moss, Malcolm
Waller, Gary


Moynihan, Hon Colin
Wardle, Charles (Bexhill)


Mudd, David
Watts, John


Neubert, Michael
Wells, Bowen


Nicholls, Patrick
Wheeler, John


Nicholson, Emma (Devon West)
Widdecombe, Ann


Norris, Steve
Wiggin, Jerry


Paice, James
Wilkinson, John


Parkinson, Rt Hon Cecil
Winterton, Mrs Ann


Patten, Chris (Bath)
Wood, Timothy


Pattie, Rt Hon Sir Geoffrey
Yeo, Tim


Porter, David (Waveney)
Younger, Rt Hon George


Powell, William (Corby)



Raffan, Keith
Tellers for the Ayes:


Redwood, John
Mr. Stephen Dorrell and


Rhodes James, Robert
Mr. Tom Sackville.




NOES


Barnes, Harry (Derbyshire NE)
Kirkwood, Archy


Beith, A. J.
Lewis, Terry


Bruce, Malcolm (Gordon)
Livsey, Richard


Campbell, Menzies (Fife NE)
McAllion, John


Clark, Dr David (S Shields)
Macdonald, Calum A.


Cook, Robin (Livingston)
McKay, Allen (Barnsley West)


Cryer, Bob
McLeish, Henry


Cummings, John
Mahon, Mrs Alice


Dewar, Donald
Meale, Alan


Dixon, Don
Nellist, Dave


Dunnachie, Jimmy
Parry, Robert


Ewing, Mrs Margaret (Moray)
Patchett, Terry


Foulkes, George
Pike, Peter L.


Fyfe, Maria
Powell, Ray (Ogmore)


Galbraith, Sam
Prescott, John


Galloway, George
Primarolo, Dawn


Godman, Dr Norman A.
Quin, Ms Joyce


Golding, Mrs Llin
Ross, Ernie (Dundee W)


Graham, Thomas
Salmond, Alex


Griffiths, Win (Bridgend)
Smith, Andrew (Oxford E)


Haynes, Frank
Smith, Sir Cyril (Rochdale)


Hogg, N. (C'nauld &amp; Kilsyth)
Steel, Rt Hon David


Hughes, John (Coventry NE)
Taylor, Mrs Ann (Dewsbury)


Johnston, Sir Russell
Taylor, Matthew (Truro)


Jones, Ieuan (Ynys Môn)
Turner, Dennis


Jones, Martyn (Clwyd S W)
Vaz, Keith


Kennedy, Charles
Wallace, James






Walley, John
Tellers for the Noes


Wilson, Brian
Mr. Dennis Skinner and


Wray, Jimmy
Mr. George J. Buckley.

Question accordingly agreed to.

Resolved,
That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorize—

(1) the payment out of the National Loans Fund of any sums required by the Secretary of State for making loans to successor companies in England and Wales which are for the time being wholly owned by the Crown, so long as the aggregate of any amounts

outstanding by way of principal in respect of such loans and sums issued out of the Consolidated Fund for fulfilling guarantees given by the Treasury in respect of sums borrowed by such companies from persons other than the Secretary of State shall not exceed £2,000 million;
(2) the payment out of the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given by them in respect of sums borrowed from persons other than the Secretary of State by successor companies in England and Wales which are for the time being wholly owned by the Crown. 
In this resolution "successor company" has the same meaning as in part II of that Act.

Electricity Bill [Ways and Means] (No. 2)

Motion made, and Question proposed,
That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

(a) to make payments to the Secretary of State in respect of advances made by him to the Council or Board;
(b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.—[Mr. Michael Spicer.]

Mr. John Maxton: I shall be brief, but it seems astonishing that when we have already debated the Second Reading of the Electricity Bill, when we have been through the full Committee stage and when we are approaching the Report stage, we should have a new money resolution and a new Ways and Means resolution. If Labour Members had not been ready to ask questions, the Government were prepared to nod the motions through without any explanation.
I hope that it will not be the junior Minister from the Department of Energy who will reply to this debate but that it will be a Minister of State, Scottish Office. The Ways and Means resolution covers the Electricity Council, but it also covers the two Scottish boards. The money resolution did not cover the Scottish successor companies. I hope that a Minister will be forthcoming in explaining exactly what is going on—[Interruption.] I know that hon. Members who stand at the Bar do not like to listen to debates; perhaps it would be better if they were to leave the Chamber.
In his previous speech the Parliamentary Under-Secretary of State for Energy tried to suggest that the Ways and Means resolution was a follow-on from the money resolution. So far as I understood what he was saying, the money resolution provided for the loan of money to the companies and the Ways and Means resolution was giving the Government the means to take that money back at a later date.
If we read the money resolution we find, first, that it does not cover Scotland at all but covers only the English and Welsh successor companies, and secondly, that it refers to successor companies and to the money that will be lent to successor companies while they are owned wholly by the Secretary of State. The Ways and Means resolution is entirely about the Electricity Council, the North of Scotland Hydro-Electric Board and the South of Scotland electricity board. It does not refer at all to the successor companies. So far as I can see, it has no effect on the successor companies. I hope that a Minister will manage to explain exactly what is meant by that.
As I read the Ways and Means motion, it states that the Electricity Council, the North of Scotland Hydro-Electric Board and the South of Scotland electricity board will be required to repay loans made by the Secretary of State. Perhaps the Minister can explain what the second part of the motion relating to "currencies other than sterling" means. That requirement will presumably cease after 1 January 1990, when the boards and the Electricity Council will disappear and the successor companies take their

places. What does the Minister mean by that? What moneys are to be repaid, to whom, and how much is involved?

Mr. Malcolm Bruce: This second motion relating to the Electricity Bill coming just before the Report stage underlines the extraordinary way in which the Bill is progressing through the House. The money resolution that we have just debated and this motion introduce significant changes which I find it hard to believe that the Government were not aware of when they brought the Bill before the House only a few weeks ago. The Ways and Means resolution raises a number of questions and requires clarification.
We have regrettably just approved a borrowing consent for an extra £2 billion and we are now asked to pass a Ways and Means resolution under which
the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board
can
make payments to the Secretary of State in respect of advances made
and also make them in relation to loans made
in currencies other than sterling.
We are entitled to know what kind of loans we are talking about and their scale. What is the time scale of the loans and what are they for?
At the moment significant changes are occurring almost weekly in the industry which the Government are trying to privatise. The industry is moving the goal posts and the Government are running around in all directions, rather like headless chickens, trying to respond to those changes.
In Committee I made a suggestion, which did not command widespread support, that as the SSEB had 110 per cent. excess capacity, it could do worse than sell one of its power stations to a company in England—and I suggested Torness. I received a letter from the chief executive of the SSEB saying that my suggestion was outrageous and irresponsible and that the SSEB would need the capacity. However, last week the SSEB announced that it was to close Hunterston A prematurely because it could not find a market for the electricity that it generated.
Will the Minister tell us whether the moneys that are moving backwards and forwards, as described in the motion, relate to the extra early costs of decommissioning the Hunterston A power station which, until recently, the SSEB claimed had still a few years to run? I refer to that station to show how muddled and confused the industry is.
I notice that over the past few days there has been confusion in the west country. It appears that the Central Electricity Generating Board is applying to build a large new 1,200 MW pressurised water reactor generating station. However, it has cancelled an order for a coal-fired station in the same region.
One can question the legitimacy of applying to build one kind of power station, closing others down prematurely and arguing that we need extra capacity when the present capacity cannot actually be deployed. It is apparent that, even in the existing state of the market, there is over-capacity. Of course, with an imaginative Government pursuing an imaginative programme, we could use the existing capacity much more efficiently and have no need to build new power stations of any description.
The question the Minister has to address is whether the Ways and Means resolution is before the House because the dynamics of the industry are changing as we look at it. No doubt to some extent the Secretary of State, having proudly produced his package of inspired duopoly as a retort to the monopoly of previous privatisations, is finding that the composition of the industry that he is proposing to create in advance of privatisation is actually changing before the flotation date and that, consequently, the industry's financial requirements, the repayment zones, the deals it is doing and the currencies it is doing them in are all changing in the light of those new circumstances.
Over the next few days we shall have a detailed debate on the Report stage of the Electricity Bill and no doubt some of these issues can be discussed more fully then, but I think that the Government have shattered any confidence that they are in control of the Bill, because we have before us a clear indication that they are not in control and they are having to make major changes as the Bill goes through the House, Indeed, in a few weeks' time the Bill will no doubt come back from another place with even more unrecognisable amendments which have never even been debated in this place, because, we will be told, the circumstances have changed.
I hope that the Minister will be able to give some reasonable and satisfactory answers, and I hope that he will accept that we are now faced with an indication of a Government and a Department out of control of their legislation.

Mr. Bob Cryer: I would like to make a few brief remarks on the question of the giving of directions. The Ways and Means resolution authorises directions to be issued by a Minister to make payments to the Secretary of State and to make payments to the Treasury. Can the Minister tell us, for example, why it was not thought necessary to include statutory instruments in the legislation to give regulatory powers to the Minister? I say this because, if we take this at face value, the Minister can give any directions he chooses in relation to the money. The great virtue of the statutory instrument, whether using the negative procedure or, preferably, the affirmative procedure, is that it actually comes before this House.
As I understand it, these directions will simply be issued by the Minister. They will not be public documents. We shall not know what is going on. They will not be subject to any scrutiny or vote. The procedure of statutory instruments is lamentable enough in its accountability, but at least it exists. There is the opportunity for a prayer to be laid and for a debate to take place, albeit for an hour and a half, or, on the affirmative procedure, for a resolution approving the instrument to be tabled.
I do not think it is a very good procedure. If the Minister says, "It has been done before," frankly, I think that, with this Government, we should have a very close look at procedures, because there is the question, raised by a former Tory Lord Chancellor, of an elective dictatorship.
I am opposed to any Government receiving unqualified powers which place them outside the scrutiny of this place. The Minister has a duty to explain why it is necessary simply to have unqualified directions. He might argue, "Of

course, this is to require money to be repaid, and surely the House should ensure that, to obtain money for the Treasury, whether in sterling or any obscure currencies such as European currency units"——

Mr. Dennis Skinner: It is not Euro-currency that is the problem, but money that comes from the Sultan of Brunei. If he wants to become involved he will want to use other foreign money and at the same time he will want to hide it. He will not want that fact disclosed by the people to whom he loans the money, who will act as purchasers, as in the case of Harrods. He will not want anybody to know that he is behind the deal.

Mr. Cryer: That is another aspect of the need for transparency, particularly in financial arrangements. If the resolution is passed, the Secretary of State will presumably have the power to give directions. Will they be by way of letter or published document? Will they have to be published in any paper anywhere at any time? Can they be questioned or refuted? For example, could the North of Scotland Hydro-Electric Board say that a direction was faulty because the amount of money contained in it was wrong? Does the Secretary of State have the right to demand a sum of money even though there is a dispute about the amount involved?
As the Minister knows, from time to time Departments get statutory instruments wrong. Sometimes they contain ambiguities or faults. Sometimes a Minister goes beyond his or her powers and a statutory instrument will come before the Scrutiny Committee to be corrected. But, as I understand it, there is no scrutiny of the directions that we are debating. I know that it will come as a shock to many hon. Members, but civil servants can make errors and Ministers can compound those by signing a bit of paper as it is pushed in front of them along with many other hits of paper, and then there is no possibility of challenge.
The Minister may say that any dispute could go to court, but that is a counsel of despair. Our legislation should be as clear as possible before it leaves this place. We should try by our best endeavours to exclude the possibility of resorting to the courts in order to rectify a mistake.
Through a statutory instrument a Minister has power to require repayment, setting out the terms and condition; of that repayment. It is open to scrutiny by the House and by the public bodies referred to in the resolution. That would be a better and more satisfactory procedure.
If the Minister says that we have always dealt with such matters in this way I can only reiterate what I said about an elective dictatorship. The fact that something has always been done in a particular way in this place is no substantial argument for saying that it should always be done in that way in the future. There are many virtues in many of our procedures, but there are also many defects., and this is one of them. Any opportunity to improve our methods should be taken.
This is a radical Government. This is the Government who undertake new procedures. [Interruption.] I am being ironic.

Mr. Skinner: That will not be clear in Hansard.

Mr. Cryer: That is the sort of claim that the Government make. My guess is that the Minister will use the old, traditional arguments to justify this legislation.
The Government often claim—falsely—to adopt new methods and to take new initiatives. This measure is not good enough. We should have some accountability. That is one of the Government's Achille's heels. They do not like accountability. That is why they are not publishing the report from the Department of Trade and Industry on the takeover of Harrods. That is why they are keeping it covered up. I know that you, Mr. Deputy Speaker, share my concern that there should be transparency and accountability to the House, and I hope that the Minister will respond in that spirit.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): In view of the three interventions I had better explain to the House exactly what the resolution does and particularly how, in answer to the hon. Member for Glasgow, Cathcart (Mr. Maxton), England and Wales are to be distinguished from Scotland.
When the new electricity companies move into the private sector it will no longer be appropriate—as the House will agree—for them to borrow for long-term purposes from the national loans fund or to enjoy interest rate benefits associated with Treasury guarantees and exchange cover on foreign currency borrowing. However, the Electricity Bill provides in clause 72 for lending from the national loans fund between vesting and flotation, and this is intended for short-term purposes.

Mr. George Foulkes: I am glad that the Minister made that clear.

Mr. Spicer: The hon. Gentleman says that he is glad I made that point clear. That is what my remarks are all about, and I hope to clarify other points as I go along.
Once in the private sector, the new companies will secure the debt finance they need from the sources that are open to the private sector generally—banks, institutions, and the money and capital markets, for example. The capital structures with which they will be established will take account of their future borrowing needs.
We believe that it is sensible that during the period when the new companies have been vested as plcs but are still publicly owned, they should start to deal with their financial requirements as much as possible as though they were already in the private sector—and despite the fact that they will still be able to borrow for short-term purposes from the national loans fund.
That means for the industry in England and Wales that present long-term debt provided from Government sources or with Government guarantee and exchange cover must be repaid by the transfer date. In the case of England and Wales, the present long-term loans are due to be repaid in instalments. By the end of December 1989 the Electricity Council's outstanding debt to the national loans fund will be £1,185 million, and its outstanding debt to foreign lenders £194 million. The new clause to which the resolution relates ensures that that outstanding debt will be prepaid by the transfer date.
In answer to the hon. Member for Cathcart, the position in respect of Scotland is substantially different. The Scottish boards' level of outstanding debt, both to the national loans fund and to foreign lenders, reflects the successive investments made in new operating plant, most

recently at Torness. The restructuring of that debt will occur primarily after vesting day, as allowed for in clause 74 of the Bill—when sums owing to the national loans fund will be replaced by a combination of debentures, issued share capital and reserves. To make that process easier, the bulk of the outstanding debt to foreign lenders will be replaced, prior to vesting, by NLF debt.

Mr. Maxton: The Minister should make it clear to the House that clause 74 also gives the Government the power to write off a large amount of that debt, if they so wish.

Mr. Spicer: The hon. Gentleman has twice made that point to the House tonight. The companies' capital structure will of course be a matter for final consideration—and that applies to England and Wales as much as to Scotland. The companies' capital structures, debt to equity ratios and so on, will be addressed when the companies are formed. I have given the hon. Gentleman the answer for which he asked and I hope that the House feels able to accept the motion.

Question put:—

The House divided: Ayes 140, Noes 40.

Division No. 139]
[11.33 pm


AYES


Alison, Rt Hon Michael
Ground, Patrick


Amess, David
Gummer, Rt Hon John Selwyn


Amos, Alan
Hague, William


Arbuthnot, James
Hamilton, Neil (Tatton)


Arnold, Jacques (Gravesham)
Hargreaves, A. (B'ham H'Il Gr')


Ashby, David
Harris, David


Atkinson, David
Hayes, Jerry


Baldry, Tony
Hind, Kenneth


Batiste, Spencer
Howarth, Alan (Strat'd-on-A)


Bennett, Nicholas (Pembroke)
Howarth, G. (Cannock &amp; B'wd)


Bevan, David Gilroy
Hunt, David (Wirral W)


Blaker, Rt Hon Sir Peter
Hunt, John (Ravensbourne)


Boscawen, Hon Robert
Hunter, Andrew


Boswell, Tim
Irvine, Michael


Bottomley, Peter
Jack, Michael


Brandon-Bravo, Martin
Jackson, Robert


Brazier, Julian
Janman, Tim


Bright, Graham
Johnson Smith, Sir Geoffrey


Brown, Michael (Brigg &amp; Cl't's)
Jones, Gwilym (Cardiff N)


Buck, Sir Antony
King, Roger (B'ham N'thfield)


Carlisle, John, (Luton N)
Knight, Greg (Derby North)


Carlisle, Kenneth (Lincoln)
Lang, Ian


Carrington, Matthew
Latham, Michael


Carttiss, Michael
Lawrence, Ivan


Chapman, Sydney
Leigh, Edward (Gainsbor'gh)


Clarke, Rt Hon K. (Rushcliffe)
Lester, Jim (Broxtowe)


Coombs, Anthony (Wyre F'rest)
Lightbown, David


Currie, Mrs Edwina
Lilley, Peter


Davies, Q. (Stamf'd &amp; Spald'g)
Lloyd, Peter (Fareham)


Day, Stephen
Lyell, Sir Nicholas


Dorrell, Stephen
Maclean, David


Douglas-Hamilton, Lord James
McLoughlin, Patrick


Dunn, Bob
Mans, Keith


Durant, Tony
Martin, David (Portsmouth S)


Evennett, David
Maude, Hon Francis


Favell, Tony
Maxwell-Hyslop, Robin


Fishburn, John Dudley
Mayhew, Rt Hon Sir Patrick


Forman, Nigel
Miller, Sir Hal


Forsyth, Michael (Stirling)
Mills, Iain


Forth, Eric
Mitchell, Andrew (Gedling)


Freeman, Roger
Mitchell, Sir David


French, Douglas
Morris, M (N'hampton S)


Gale, Roger
Moss, Malcolm


Garel-Jones, Tristan
Moynihan, Hon Colin


Gill, Christopher
Nelson, Anthony


Goodhart, Sir Philip
Neubert, Michael


Goodson-Wickes, Dr Charles
Nicholls, Patrick


Greenway, John (Ryedale)
Nicholson, Emma (Devon West)


Gregory, Conal
Norris, Steve


Griffiths, Peter (Portsmouth N)
Paice, James






Parkinson, Rt Hon Cecil
Taylor, John M (Solihull)


Patten, Chris (Bath)
Taylor, Teddy (S'end E)


Porter, David (Waveney)
Thompson, D. (Calder Valley)


Powell, William (Corby)
Thompson, Patrick (Norwich N)


Raffan, Keith
Thurnham, Peter


Redwood, John
Trippier, David


Rhodes James, Robert
Trotter, Neville


Ryder, Richard
Twinn, Dr Ian


Sackville, Hon Tom
Waddington, Rt Hon David


Shaw, David (Dover)
Waller, Gary


Shephard, Mrs G. (Norfolk SW)
Watts, John


Shepherd, Colin (Hereford)
Wells, Bowen


Smith, Tim (Beaconsfield)
Wheeler, John


Speller, Tony
Widdecombe, Ann


Spicer, Michael (S Worcs)
Winterton, Mrs Ann


Squire, Robin
Winterton, Nicholas


Stern, Michael
Wood, Timothy


Stevens, Lewis
Yeo, Tim


Stewart, Allan (Eastwood)



Stewart, Andy (Sherwood)
Tellers for the Ayes:


Stradling Thomas, Sir John
Mr. David Heathcoat-Amory


Taylor, Ian (Esher)
and Mr. Michael Fallon.




NOES


Barnes, Harry (Derbyshire NE)
Haynes, Frank


Bruce, Malcolm (Gordon)
Hogg, N. (C'nauld &amp; Kilsyth)


Buckley, George J.
Hughes, John (Coventry NE)


Callaghan, Jim
Lewis, Terry


Campbell, Menzies (Fife NE)
Livsey, Richard


Cook, Robin (Livingston)
McAllion, John


Dixon, Don
Macdonald, Calum A.


Dunnachie, Jimmy
McFall, John


Eastham, Ken
McKay, Allen (Barnsley West)


Ewing, Mrs Margaret (Moray)
McLeish, Henry


Foulkes, George
Mahon, Mrs Alice


Fyfe, Maria
Meale, Alan


Galbraith, Sam
Nellist, Dave


Galloway, George
Patchett, Terry


Golding, Mrs Llin
Pike, Peter L.


Graham, Thomas
Powell, Ray (Ogmore)


Griffiths, Win (Bridgend)
Quin, Ms Joyce





Salmond, Alex
Wray, Jimmy


Taylor, Matthew (Truro)



Vaz, Keith
Tellers for the Noes:


Wallace, James
Mr. Bob Cryer and


Wareing, Robert N.
Mr. Dennis Skinner.

Question accordingly agreed to.

Resolved,
That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

(a) to make payments 1.o the Secretary of State in respect of advances made by him to the Council or Board;
(b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.

Question put and agreed to.

Resolved,
That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

(a) to make payments to the Secretary of State in respect of advances made by him to the Council or Board;
(b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.

LAW OF PROPERTY (MISCELLANEOUS PROVISIONS) BILL [LORDS]

Order for Second Reading read.

Hon. Members: Object.

Bill to be read a Second time tomorrow.

Friendly Societies

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kenneth Carlisle.]

Mr. Anthony Coombs: I am pleased to have this opportunity of raising the important subject of the role of friendly societies in encouraging savings, for which they have a long and respected tradition in this country, dating back over 400 years to the incorporation of the Carters in Leith in 1555. In 1973 they were defined as
a society of good fellowship for the purpose of raising from time to time, by voluntary contributions, a stock or fund for mutual relief and maintenance of all and every member thereof, in old age, sickness and infirmity, and for the relief of widows and children of deceased members.
In encouraging thrift and responsibility and in promoting an active concern for others, particularly among the lower income groups in society, that description of 1793 adequately fits the active citizens of today whom the Government rightly wish to encourage.
Although the friendly societies have a valuable and increasing role to play in a social and financial context today, they face three major difficulties. First, the market for financial services is becoming more concentrated and larger scale. The localised and heterogeneous nature of the societies—whether they be dividing, deposit or Holloway societies—puts them at a disadvantage.
Secondly, the anachronistic legal status of friendly societies and the legal structure within which they operate, which basically dates back to Victorian legislation and, particularly before that, to 1793, has restricted the scope of their activities and their ability to respond to financial trends in the money markets.
Thirdly, the taxation and regulatory regime in which they work, and which they recognise to be necessary in most respects, is not sensitive to their character and the services that they provide. That is particularly the case in their developing a role which is complementary to the welfare state and not swamped by it.
The history of friendly societies gives an insight into the problems that they experience and into their potential. Before 1911, they were basically self-help organisations which mitigated the excesses of the workhouse and the Poor Law of 1834. By 1911, they had 6·6 million members. The great expansion took place after 1911 when, under the National Insurance Act, friendly societies were given approved society status, which meant that they retained their mutual insurance and contributory schemes and used those as a springboard for their own activities, as they took compulsory payments from taxpayers and made distributions to the sick. By 1945, they had 8·7 million members.
After 1945, despite the fact that Lord Beveridge wanted his reforms to leave room for voluntary action and a system that did not stifle opportunity, incentive or responsibility, as the system evolved, benefits were 30 per cent. above the levels recommended by Beveridge.
Their size and scope expanded rapidly, to the extent that, between 1950 and 1987, they increased by more than five and a half times social security benefits—from 4·7 per cent. to 11 per cent. of gross domestic product.
There was no direct role, as there had been prior to 1945, for friendly societies in administering the schemes, and inevitably, because of the size of the schemes, contributory insurance became that in name only, and the

scheme was financed primarily by the general taxpayer. The effect of these changes was to erode the friendly societies' traditional market, and, more important, to erode the ethos of saving and of mutual help and mutual responsibility, which has sustained the societies for literally hundreds of years. Now, there are only 462 societies with 7 million members, and their numbers are declining.
It is ironic that over the last few years the greater provision and the good intentions of the welfare state have, in fact, increased the division between those who are financially sophisticated, who have higher incomes and are natural savers, and those who have low incomes, who are dependent upon the state, who, very often, are caught in the poverty trap and therefore have no particular incentive to save. Although there have been recent attempts, via social security legislation, to counteract such trends, I believe that the friendly societies have a principal role in bridging that social and economic gap.
The trends bolstering societies have been boosted by three further factors. First, there are the demographic changes that will take place over the next few years. I am thinking, in particular, of the increase in the elderly population from 9 million now to 10 million by the year 2000. Indeed, the number of very elderly people is likely to increase by 50 per cent., to 1·5 million, by the year 2000. Those changes will supplement the need for an addition to state retirement incomes via pensions and, indeed, the kind of annuities that have been provided by friendly societies.
Secondly, I believe that more people will want to arrange their affairs on a more localised, community basis and will react against the economies of scale that we have seen in the last few years. Thirdly, we have a desire to increase savings for economic reasons, given the fact that the savings ratio now is only 1·7 per cent. of disposable income—back to the 1949 levels—against 11 per cent. in 1985. Of course, it would be unrealistic to expect that all friendly societies will necessarily attempt to meet all these needs. Indeed, there has been an element of concentration already. The chief registrar, in his latest report, which came out about a month ago, said that 90 per cent. of total funds going into the friendly society movement is generated by 37 societies. The five largest are collecting societies that lack many characteristics of friendly societies in the strict sense but, nevertheless, support the arguments that the friendly societies liaison committee put forward.
On the other hand, one third of friendly societies are not actually taking any new business, and I believe that there will be an inevitable division between those that do a lot of taxable business in the mass market—I am thinking, for instance, of collecting societies, which collected some £190 million in contributions in 1987—and those smaller, more socially orientated, more traditional friendly societies, which concentrate on more philanthropic and local activities.
Nevertheless, in order to facilitate the adoption of these new roles, and given the speed and competitive pressure of financial markets at present, there are two areas of reform that need to be addressed urgently. The first is the need to widen the scope of the potential activities of friendly societies. The present scope, under schedule 1 to the Friendly Societies Act 1974, is outdated and, indeed, in many respects nonsensical. For instance, friendly societies can provide life policies for married couples, but not for couples who are living together; they can insure tools of the trade against fire, for the princely sum of £15, but not


against any other kind of loss; and they are prevented from writing any non-life assurance business, whether on an agency basis or direct.
Subject to the necessary regulations, I believe that the friendly societies ought to be allowed to manage, not merely to invest in their own unit trusts through subsidiaries and without sacrificing their mutual status. They ought to be able to set up their own personal equity plans. That would increase share ownership among the lower income sectors of society. They ought to be able to write their own reinsurance, especially on the risks of other societies. They ought to be able to engage in non-life assurance, at least on an agency basis, and they ought to be able to make loans to their members that are slightly greater than the present totally outdated level of £200. Finally, they ought to be treated consistently, by the Inland Revenue, in particular, as between the powers of those societies that are sui generis, rather than be discriminated against on the basis of when they were set up.
It is a sad fact that, while these powers are not available to friendly societies, some—like the Family Assurance Society—have already opted to go, with the consent of 75 per cent. of their members, for plc status or for mutual life office status, which will mean leaving the friendly societies movement and many of the advantages that that gives.
By widening the scope of services, they ought to be able to provide, through the friendly society movement, effective competition to other financial institutions and more effective and efficient services for their members. They ought to be able to increase their access to markets which at present are dominated by insurance companies and pension funds, particularly by those which corner the market by means of tied intermediaries. They get one and three quarter times the recommended commission rates and the disclosure rules for commission are not so rigorous for independent financial intermediaries, upon whom friendly societies have to rely.
Equally, however, it is unrealistic to think that every friendly society will wish to engage in this kind of activity. It is estimated that only the 40 largest will do so. Others will try to fulfil the more local social and philanthropic aims that are traditional in friendly societies. However, in order to do so—and this applies especially to those friendly societies that do not benefit from economies of scale because of their small size—it has been estimated that the financial burden of complying with the Financial Services Act will mean a 30 per cent. increase in annual costs. They have been deprived of a volunteer sales force because of the expertise now required by the Financial Services Act of those who sell financial products. Tax exemption of their products, particularly life assurance, has been crucial and, I believe, will become even more crucial for the small friendly societies, and for their big brothers, too.
It is a sad fact that, since 1987, for all societies, whether they do taxable business or not, the tax-exempt limit has been set at £9 per month per premium, which is just over £100 a year, and £750 for sums assured. That represents only four weeks' average wages now. Just before the war those same tax-exempt figures represented two years' average wages. Therefore the case for a substantial increase in the tax-exempt limits for friendly societies is very strong.
To increase tax-exempt limits is consistent with the tax relief available for occupational pension schemes or with

the tax exemption that is available, up to certain limits, on certain national savings deposits or on the tax-free benefits available from investments in gilts, in certain circumstances. That contrasts strongly with the increase in this year's Finance Bill from £2,400 to £4,800 in the annual payments to personal equity plans, the proceeds of which can be tax-exempt and which, ironically, so many societies want to be able to market themselves.
It could be argued that organisations with quaint names such as the Nottingham Oddfellows, the Sons of Scotland Temperance or even the Hearts of Oak, and with the even quainter values of self-responsibility, thrift and mutual help, founded on their mainly Victorian origins, should either join the ranks of, or be absorbed by, the legions of financial supermarkets. That would be a mistake. Time will prove that, as organisations for the lower income groups, supplementing the provisions of the social security system and improving the incentives arid opportunities for lower income groups within the welfare state, to save, and as organisations that cope sensitively with demographic changes in a local way, the friendly societies have an enormous contribution to make.
Given the constraints on legislative time, the societies do not expect an immediate commitment by the Minister to a new friendly societies Act—they appreciate how complicated and wide-ranging that would be. But they would like a commitment by the Government to the principle of a healthy friendly society movement. They would like to hear of the imminent arrival of a package of measures, including fiscal changes, that would help there fulfil their role of encouraging saving in Britain today.

The Economic Secretary to the Treasury (Mr. Peter Lilley): I congratulate my hon. Friend the Member for Wyre Forest (Mr. Coombs) on his success in securing this Adjournment debate and on his characteristic lucidity in explaining the role of the friendly societies and putting his case tonight. I found his analysis of the historic antecedents of the societies fascinating, as was his examination of the problems that they now face.
Friendly societies are an important part of our social and economic fabric. They have supporters in all parts of the House—sadly, those among the Opposition have not turned up—and enemies, as far as I know, in none. For that reason they are rarely the subject of debate in the House, and I welcome the opportunity which my hon. Friend has provided us with tonight to discuss and consider them further.
Friendly societies have a distinguished history of encouraging thrift and mutual self-help. That has changed as the years have gone by, and as my hon. Friend has said, their role has become more difficult in some ways and they have had to adapt to changing circumstances. There are signs that they are doing so. The Government have sought, without going as far as major new primary legislation, to help the societies to adjust to these conditions in a number of ways.
For example, we have implemented the European Commission life directive, and brought the solvency basis of the largest societies into line with that of the insurance companies, and removed restrictions on investments for authorised societies. I recognise that my hon Friend feels that the Financial Services Act 1986 placed considerable burdens on many societies, but it did enable the


establishment of an investor protection scheme, of which the societies with assets and members representing over 90 per cent. of those who benefit from the friendly society movement have taken advantage.
Finally, the Financial Services Act provided relief for small societies under the transitional provisions of schedule 15 to the Act, treating them as exempt if they decide to do no new regulated investment business or are already doing no new business.
The friendly societies' liaison committee published a memorandum last year which it sent me and with which my hon. Friend will be familiar. I met the committee in September to discuss it. It set out its case for a new friendly societies Act which would grant extended powers to those societies capable of exercising them. Like my hon. Friend, it requested a new tax regime that recognised the special status of friendly societies.
At my meeting with the liaison committee, I agreed to undertake a comprehensive study of the legislative framework of friendly societies. This is, as my hon. Friend recognised, a long and complex task, and it is still under way. Only when it is complete will the Government be able to decide whether and what new legislation is warranted and, more important, the priority it should be given in relation to other claims on parliamentary time.
It may assist the House in understanding the time taken to consider the friendly societies' proposals if I set out some details of the problems faced in preparing the report I commissioned.
First, the nature of friendly societies is such as to make the situation far from straightforward and simple. As my hon. Friend recognised, there is a restriction on the powers of societies in schedule 1 of the 1974 Act, which is essentially a consolidation of the legislation laid down in the 19th century. It is undoubtedly possible to amend and extend that in some ways analogous to those suggested by my hon. Friend. If one were to go further and try to give the societies powers to set up subsidiaries to undertake a number of activities that he and the liaison committee suggested the friendly societies ought to be allowed to undertake, that would mean a fundamental restructuring of the nature of friendly societies. At present they are not corporate bodies, and consequently they cannot possess subsidiaries. It would need a very fundamental change in the legislative nature of friendly societies to enable them to become corporate bodies and possess subsidiaries. That would be quite a daunting and difficult task, to say the least.
Of course, societies have the possibility at present to convert themselves into mutual insurance societies. My hon. Friend mentioned that one society was considering doing that, and a number of societies have done so in the past.
I am also looking into the supervision and regulation of friendly societies. The Government have in recent years revised the regulatory regime for banks, building societies and those conducting investment business. Investors expect and should receive reasonable protection for their savings. There is now a voluntary investor protection scheme in place and societies have in general responded well to becoming members. However, the regulatory regime for friendly societies has lagged behind that of other financial institutions.
The friendly societies movement has long provided encouragement to the small saver and those who are relatively poor. Although the amounts invested in friendly societies tend to be lower than many other forms of saving they nevertheless represent significant amounts for the individual. When I met the friendly societies liaison committee I told it that any extension of societies' powers would go hand in hand with an improved regulatory regime. I am sure it will accept this.
My hon. Friend also mentioned the tax position of friendly societies, as did the liaison committee. There is a distinction between the traditional social and philanthropic role of societies and their more commercial investment business. It is right that the latter should be taxed in broadly the same way as life offices. The current tax rules are therefore designed to favour the more traditional societies, writing longer-term policies for funeral expenses or retirement, as against more commercial societies selling 10-year endowment policies for pure investment purposes. The change in 1987—rather than 1984, as I think my hon. Friend said—from a limit on sum assured to premiums, setting that limit at 100, helped to secure that objective. The limit is kept under review, but I see no need for art increase at present.
One measure that friendly societies have suggested in particular is that they should be able to issue tax-exempt policies up to an annual subscription equal to that for unit trusts within personal equity plans, and my hon. Friend endorsed that proposal. Since the improvements to PEPs in this year's Budget, that would entail raising the present £100 limit to £2,400 a year. As my right hon. Friend said, the essential purpose of the tax arrangements for personal equity plans and the changes he made in the Budget is to encourage and widen share ownership and strengthen popular capitalism. Therefore, there is no case for an increase in the £100 annual limit on tax-exempt life assurance policies because that would not be geared to achieving that widening of direct share ownership. In practice, it is likely to do little more than divert business from other forms of savings—including diverting it from PEPs and taxable life insurance.
A related issue is whether registered friendly societies should themselves be allowed to act as plan managers. I shall certainly bear this suggestion in mind when I look into the broader issues concerning the regulation and supervision of societies. As to whether any of the other tax provisions should be changed—for example, the rule that limits the extent to which friendly societies can issue new tax-exempt policies—the time to consider such issues will be when the regulation and supervision of societies have been settled. At that stage, the representations that my hon. Friend has made will, of course, weigh with me.
While I am on the subject of tax, I should mention that one type of policy which some friendly societies issue will benefit from the new tax relief for retired people announced by my right hon. Friend the Chancellor in the Budget. I am sure that friendly societies that offer such policies will welcome this relief and will market their policies more vigorously to those who can benefit.
The Budget also introduced changes in the taxation of life companies. Friendly societies which issue policies that are not tax-exempt may be concerned about the effect of the reforms of tax rules for life assurance proposed in the Budget. It is clearly appropriate that societies which carry on business of this nature should receive tax treatment


comparable with the mutual life assurance companies so that they will continue to compete for business on a broadly equivalent basis.
A policyholder with a typical society will benefit from the reduced rate for policyholders' income and gains as suggested by the liaison committee in its response to the Inland Revenue's consultative document on life assurance taxation. New policyholders will benefit from the abolition of life assurance policy duty. Such policyholders will be unlikely to be affected by the proposal to ring-fence pension business expenses, or by the measures that change the calculation of pension profits. The revised treatment for expenses of acquiring new life assurance business will lead to some acceleration of the payments against tax, but taken together with the reduction in tax rate, the effect is expected to be broadly neutral.
I know that there is much sympathy for the friendly society movement and a desire to see it continue to prosper and perform its essential role in encouraging savings and mutual self help. My hon. Friend expressed those matters most eloquently. Many hon. Members would back my hon. Friend's call for speeding up the fostering of friendly societies but we must not try to do that more rapidly than may be possible. Rightly, my hon. Friend did not dwell on legislation, and you, Mr. Deputy Speaker, would not have permitted that in an Adjournment debate. I think that I have demonstrated that I am considering whether there is scope and need for legislation, and during the current review I shall certainly bear in mind my hon. Friend's interesting comments.

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Twelve o'clock.